Walgreens planning significant U.S. store closures, lowers profit guidance

State of play: The company lowered its profit guidance Thursday, citing "challenging pharmacy industry trends and a worse-than-expected U.S. consumer environment."

• It now expects an adjusted profit of $2.80 to $2.95 per share for its fiscal 2024 ending in August, lower than the $3.20 to $3.35 per share range it announced three months ago.

Zoom in: A quarter of Walgreens' more than 8,000 U.S. stores are underperforming, and the company expects to close "a significant portion" of that group over the next three years, CEO Tim Wentworth said on Thursday's earnings call.

• It could consider additional closures from this group down the line if it's unable to return them to profitability, he said.

Walgreens' shares are trading down 25% Thursday. Shares of competitor CVS Health are also trading down over 4%.

The big picture: Lower reimbursement rates for prescription drugs have cut into drugstore profits in recent years.

• Simultaneously, chains are facing greater pressure from Amazon, Walmart and Dollar General in rural areas, CNN notes.

What we're watching: Wentworth, who took the reins from Roz Brewer last fall, also plans to cut Walgreens' stake in primary-care provider VillageMD and will no longer be its majority owner.

Editor's note: This report has been updated with information from Walgreens' earnings call.