After Walgreens reported disappointing quarterly earnings on Thursday, CNBC's Jim Cramer told investors why Amazon is making it harder for the drugstore giant to succeed.
“The stock market can be a cruel, cruel, cruel gamer. And so can capitalism. I'm sure Walgreens will make money somehow before they go bankrupt with their debt,” he said. “But right now, I'm going to invest in companies whose stocks are on the all-time high list, not the all-time low list. I'm going to invest in Amazon.”
The company's shares hit a new 52-week low on Thursday, sending the stock down 22%, after the company reported profits that fell well short of Wall Street expectations. The company also sharply cut its full-year outlook, and CEO Tim Wentworth said in a statement that Walgreens continues to face a “challenging operating environment” as “ongoing pressures on the U.S. consumer” and “market forces” hurt its pharmacy business.
Cramer said Walgreens is more expensive and less convenient than Amazon, adding that its stores are understaffed. He also spoke about the chain's ongoing theft problems and expressed frustration that many of its products are locked away behind plexiglass.
He acknowledged that Walgreens' in-store pharmacy business may have a slight advantage over Amazon for now, but Cramer noted that pharmacists can be hard to find and the e-commerce giant has its own pharmacy division.
Cramer worries that Walgreens could become like Borders, the now-defunct bookstore chain that saw its profits disappear as Amazon's popularity grew.
“Amazon wasn't trying to kill Borders. They weren't trying to kill Walgreens,” he said, “but they were trying to get the best products at the best value in the most convenient place: your home.”
Walgreens and Amazon did not immediately respond to requests for comment.
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