Walgreens Stock Slips After Dividend Suspension: Retail’s Bearish

The change in capital allocation should strengthen WBA’s balance sheet, the company said.

Shares of Walgreens Boots Alliance ($wBA) dropped nearly 6% on Thursday after it announced it won’t pay cash dividend to shareholders as it re-evaluates capital allocation policy as part of its turnaround efforts, dragging down retail sentiment.

The company’s cash needs over the next several years, including potential litigation and debt refinancing, were important considerations as part of the decision to suspend the dividend, it said in a statement.

According to the statement, the change in capital allocation should also strengthen WBA’s balance sheet by reducing debt over time and improving its free cash flow. 

Walgreens also said its leadership remains focused on successfully executing against its strategic priorities and maintaining financial discipline, which it believes will deliver sustained value creation over the long term, noting it has embarked on a retail pharmacy-led turnaround underpinned by a “sustainable economic model.”   

Sentiment on Stocktwits dipped to ‘bearish’ from ‘neutral’ a week ago. Message volumes, however, were in the ‘low’ zone.

Separately, the company’s leadership also indicated at its annual general meeting it will uphold its fiduciary duty to its shareholders to consider and evaluate all options as it looks to maximize its equity value and build a future Fly.com reported.

While it was "open" to take the best path forward, it remains focused on the multiyear turnaround, added the report.

WBA employs about 312,000 people, and has a presence in eight countries. Its brands include Walgreens, Boots, Duane Reade, the No7 Beauty Company, and Benavides.

Walgreens stock is up 22% year-to-date.

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