Walgreens Boots Alliance Inc. slashed its guidance due to a worsening retail environment and announced it would close significantly more stores as its new chief executive officer seeks to turn the business around.

Walgreens’ management said Thursday that in addition to the store closures, they would make more organizational changes, without specifying further job cuts. The company has had a rocky few years with turnover in the executive ranks amid a challenging retail climate. 

Shares fell as much as 16 per cent before markets opened in New York. CVS shares were also down three per cent.

Walgreens lowered its forecast range for full-year adjusted earnings to US$2.80 to $2.95 per share, after lowering the top end of its guidance the prior quarter. Adjusted earnings for the three months ending May 31 were 63 cents a share, worse than the 68 cents that Wall Street analysts anticipated. 

The company said it expects recent headwinds to persist into the next fiscal year, according to presentation slides posted ahead of management’s call with investors.

Walgreens also announced a $431 million writedown of its international Boots retail chain. The company had revived discussions last year about a potential exit from Boots but has since shelved plans for a possible initial public offering of Boots and is now exploring other options, Bloomberg reported, citing people with knowledge of the matter. The Boots business saw quarterly sales of $5.7 billion, an increase of 2.8 per cent from the year-ago period.

Like rival CVS Health Corp, Walgreens has been moving away from its retail roots and pushing deeper into more lucrative areas like primary care. The efforts have hit profits though, putting pressure on executives to execute a turnaround.

The shares lost half their value during the short tenure of Chief Executive Officer Roz Brewer. Under current CEO Tim Wentworth, who was appointed in 2023, the company has launched a review of the business aimed at increasing cash flow and growing more in health care. Late last year, the drugstore announced a $1 billion cost-cutting program, in part by closing unprofitable locations. On Thursday, management said they’re on track to meet that goal.

The U.S. health-care unit, which includes primary-care provider VillageMD, grew more than its traditional retail pharmacy division.

The health-care segment posted revenue of $2.1 billion, an increase of 7.6 per cent compared to the year-ago quarter. Walgreens has invested $5.2 billion in VillageMD, allowing it to open hundreds of doctors’ offices in its drugstores. It has since announced plans to close 160 of the clinics, and last quarter announced a $5.8 billion writedown related to the business.

The company’s U.S. retail pharmacy unit posted revenue of $28.5 billion, an increase of 2.3 per cent from the year-ago quarter.