Tuesday got off to a sluggish start on Wall Street, as market participants reined in the enthusiasm that produced healthy gains on Monday. Worries about the U.K.'s potential exit from the European Union weighed against signs of a stronger economy in China. As of 11:12 a.m. EDT, the Dow Jones Industrial Average (DJINDICES:^DJI) was down 129 points to 26,133. The S&P 500 (SNPINDEX:^GSPC) fell 7 points to 2,860, and the Nasdaq Composite (NASDAQINDEX:^IXIC) dropped 14 points to 7,814.
One of the newest members of the Dow is Walgreens Boots Alliance (NASDAQ:WBA), and the drugstore chain's latest quarterly results had a pronounced influence on that illustrious benchmark this morning. Meanwhile, privately held workplace messaging specialist Slack Technologies looks like it's made a decision about where it expects to list its shares once it goes public -- although it's taking a page from the playbook of music-streaming company Spotify (NYSE:SPOT) in how it's doing so.
Walgreens looks a little ill
Shares of Walgreens Boots Alliance were down 12% after the drugstore chain giant reported its fiscal second-quarter financial results. Walgreens said that its sales for the quarter were up almost 5% from the year-ago period, but the company's bottom line went in the wrong direction. Adjusted operating income was down more than 10%, and a 5% drop in earnings per share was far worse than the modest gain that most of those following the stock were expecting to see.
CEO Stefano Pessina didn't pull any punches, calling the period "the most difficult quarter we have had since the formation of Walgreens Boots Alliance." Pessina pointed to pressure on reimbursement rates for prescriptions, generic pricing, and weakness from consumers in both the U.S. and U.K. markets.
As a result of the weakness, Walgreens cut its earnings guidance for the full fiscal year. The drugstore giant now expects flat adjusted earnings for the year, down from its previous projection for growth of 7% to 12%.
In response, Walgreens plans to redouble its efforts to reduce costs over the next several years. In addition, the company will work on transforming its retail locations with what it calls "in-store neighborhood health destinations" designed to draw more traffic. Walgreens hopes that those measures will yield better results in fiscal 2020, but even though the shares have looked relatively cheap for some time, investors weren't in a mood to be patient today.
Slack heads for the NYSE
Slack Technologies has been one of the most highly anticipated IPOs of the year, and many investors are looking forward to having a chance to invest in the fast-growing workplace messaging specialist. It now appears that when they get their chance, it'll be through a direct listing on the New York Stock Exchange.
Direct listings differ from traditional IPOs in the process that they follow. With most IPOs, Wall Street financial companies act as underwriters, finding investors who are willing to participate in the offering by buying shares. The sale of those shares happens immediately before the stock begins trading on public stock markets. By contrast, with a direct listing, the company itself sells shares directly to the public on the stock exchange.
Slack isn't the first company to go this route. Last year, Spotify did a direct listing on the NYSE, and although the share price has had its ups and downs since, most participants seemed to be happy with how the process went.
Most of those following Slack believe that the offering will take place around the beginning of summer. That gives investors some time to look more closely at Slack's business and whether they want to own a piece of it.