Under pressure to improve its results, Walgreens Boots Alliance is cutting its next dividend by 48% to 25 cents per share, a big move for a company known for its generous dividends and having paid them for more than 90 years.
The pharmacy giant narrowed its quarterly net loss and posted results that were slightly above Wall Street analysts' expectations on an adjusted basis. Its shares were down about 10% in early trading.
The new dividend, due to be paid in March, is the first sign that new chief executive Tim Wentworth is ready to shake things up. Wentworth said the cut “reaffirms our goal of increasing cash flow while freeing up capital to invest in sustainable growth initiatives.”
Still, the company has signaled that it has no intention of eliminating its dividend. Chief Executive Officer Stefano Pessina said the company's board “continues to view the dividend as a key element of WBA's overall attractiveness for many of our shareholders.” The last quarterly dividend, paid in December, was 48 cents per share.
Wentworth hinted that more changes may be coming. “We are exploring all strategic options to increase sustainable, long-term shareholder value, with a focus on rapid actions to adjust costs and increase cash flow,” he said.
For the quarter, Walgreens reported a loss of $67 million, compared with $3.7 billion a year earlier when the company recorded a charge related to the settlement of an opioid litigation.