Walgreens Suspends Quarterly Dividend Amid Turnaround Efforts

Walgreens Boots Alliance is suspending its quarterly cash dividend as the company works to free up cash for debt financing, litigation needs and to fund the company’s “broader long-term turnaround,” the company said.

The drugstore giant, which is already in the early stages of closing more than 1,200 stores, announced the suspension of the dividend Thursday afternoon following a meeting of the company’s board of directors.

“This change in capital allocation is aimed at strengthening WBA’s balance sheet by reducing debt over time and improving free cash flow, as the company works toward achieving a retail pharmacy-led turnaround underpinned by a sustainable economic model,” Walgreens said in a statement. “The company’s cash needs over the next several years, including with respect to litigation and debt refinancing, were important considerations as part of the decision to suspend the dividend.”

The company didn’t say how much money suspending the dividend would bring in to the company’s operation.

“WBA 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,” Walgreens statement added.

Thursday’s announcement comes about a year after Walgreens slashed its annual dividend by nearly 50% to strengthen its balance sheet and cash position to invest in its businesses.

Earlier this month, Walgreens fiscal first quarter earnings showed a wider net loss than a year ago but several operating improvements across company businesses. That report came just one month after a three-byline report in the Wall Street Journal that said Walgreens is considering a sale to private equity firm Sycamore Partners.

But Walgreens management has never acknowledged any buyout offers, saying executives don’t comment on rumors or speculation. The potential for a buyout wasn’t even addressed by Walgreens CEO Tim Wentworth during a call with Wall Street analysts and investors to discuss first quarter earnings.

Walgreens chief executive Tim Wentworth said on the earnings call that the company expects to ramp up the pace of the store closure part of its “optimization plan” while continuing the process to sell its stake in the VillageMD primary care company that has already cost the company several billion dollars.