Walgreens begins 2020 as it ended 2019, with earnings slump

Walgreens is kicking off its year much as it ended its last, with a big earnings plunge.

First-quarter net income for the north suburban Deerfield-based company tumbled about 25% as the drugstore chain filled fewer prescriptions than expected and continued to work through a cost-cutting program geared to produce billions in future savings.

Walgreens executives said Wednesday that the company was hurt, in part, by a difficult market in the United Kingdom, but it also generated more cash than expected, and that cost-cutting may exceed the company’s goal of $1.8 billion in annual savings by 2022.

Shares of Walgreens, a Dow component, slid nearly 6% Wednesday.

The company runs more than 18,750 stores, including nearly 9,300 in the United States.

The company and its competitors have been hurt by challenges like tighter prescription reimbursement from insurers and growing competition from online options.

Walgreens is trying partnerships to draw more people into its stores. That will take years to develop, believes Edward Jones analyst John Boylan.

“We anticipate that profitability and sales growth may be hard to come by for the foreseeable future,” Boylan wrote in a research note.

Executive Vice Chairman and CEO Stefano Pessina told analysts Wednesday that the company has a medium to long-term improvement strategy instead of focusing on the next quarter’s results.

“I hope that in the end, we will be right,” he said.