Why Walgreens Boots Alliance Stock Slumped 13.6% in January
Shares of Walgreens Boots Alliance (NASDAQ: WBA) sank 13.6% in January, according to data provided by S&P Global Market Intelligence. The main factor weighing on the pharmacy giant was its decision to slash its dividend. That ended a streak of dividend increases that lasted nearly half a century.
Walgreens started 2024 off on a sour note. The pharmacy giant slashed its quarterly dividend by 48%. The company made the move to strengthen its balance sheet and cash position. That will allow the company to reinvest the retained cash into its growth initiatives, which it expects will grow shareholder value. The cut ended an era of dividend growth that had lasted nearly 50 years.
Walgreens had to cut its dividend due to challenges facing its pharmacy business, which made it more difficult for the company to fund its strategy to build a U.S. healthcare business. Those challenges were evident in the company's first-quarter financial results, which it reported in early January. While Walgreens sales rose 8.7% to $36.7 billion, its earnings tumbled more than 40% to $571 million, or $0.66 per share. Meanwhile, the company was burning through cash to build its U.S. healthcare business. Its operating cash flow was negative $281 million during the first quarter, while free cash flow was negative $788 million.
Source Fool.com
