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Walgreens doled out some tough medicine to its investors this week when it cut its quarterly dividend to shareholders nearly in half, in a move to conserve cash and strengthen its long-term financial position, according to CEO Tim Wentworth.
Deerfield, Ill.-based Walgreens Boots Alliance Inc (WBA), which operates one of the largest US drugstore chains, on Thursday declared a quarterly dividend of 25 cents per share, a reduction from 48 cents per share the previous quarter. The dividend will be payable on March 12.
The move will allow Walgreens to increase cash flow and free up capital “to invest in sustainable growth initiatives in our pharmacy and healthcare businesses, which we believe will ultimately improve shareholder value,” Wentworth said in a statement.
“The WBA board is committed to ensuring that capital allocation priorities are balanced between investment opportunities for growth, debt paydown, and returning cash to investors,” Executive Chairman Stefano Pessina added. “Importantly, we are maintaining a competitive yield as our board continues to view the dividend as a key component to overall attractiveness of WBA to many of our shareholders.”
Walgreens is dealing with “waning demand for Covid vaccines and testing,” as well as reduced spending from cash-strapped consumers contending with inflation, according to US News & World Report. But the latest earnings report is an improvement from October, when Walgreens “missed earnings estimates for two straight quarters,” a CNBC report noted.
The company reported a quarterly net loss of $67 million, or 8 cents per share, a marked improvement over its net loss of $3.7 billion ($4.31 per share) in the same quarter a year ago. First quarter sales increased 10% year over year to $36.7 billion.