Walgreen Q1 Profit Up 68%, Meets Estimates

(RTTNews) - Drugstore chain operator Walgreen Co. (WAG) Friday reported about 68 percent jump in the first-quarter profit, benefited by growth in sales as well as contributions from Alliance Boots GmbH. Earnings per share and revenues matched analysts' expectations.

The company noted that during the quarter, it increased both traffic and sales, as well as its pharmacy market share.

"However, the year-over-year negative impact related to generics, including the significant shift in the generic wave from a peak a year ago to a trough this quarter as well as our strategic decision to make meaningful promotional investments in our daily living business, affected our margins for the quarter," said President and CEO Greg Wasson.

For the first quarter, net earnings attributable to company climbed 68.3 percent to $695 million from $413 million in the previous year. On a per share basis, earnings were $0.72, up from $0.43 per share a year earlier.

On an adjusted basis, earnings per share for the year-ago quarter was $0.58. On average, 23 analysts polled by Thomson Reuters expected the company to earn $0.72 per share for the quarter. Analysts' estimates typically exclude special items.

The company noted that its partnership with Alliance Boots GmbH announced in mid-March contributed earnings of $0.14 per share share to its first-quarter adjusted results, including $0.07 cents attributable to the deferred tax adjustment applicable to Alliance Boots.

Quarterly sales grew 5.9 percent to $18.33 billion from $17.32 billion a year ago. Twenty Wall Street analysts expected revenues of $18.35 billion.

Front-end comparable store sales increased 2.4 percent, with customer traffic increase of 0.2 percent and basket size growth of 2.2 percent. Total sales in comparable stores sales or sales at stores open for at least 12 months, were up 5.4 percent from the preceding year.

Prescription sales, which accounted for 64.7 percent of sales in the quarter, increased 7.3 percent, while prescription sales in comparable stores increased 7.2 percent.

The company filled 213 million prescriptions during the period, an increase of 5.8 percent from last year. Prescriptions filled in comparable stores improved 5.5 percent.

Looking ahead, the firm estimates accretion from Alliance Boots in the second quarter of fiscal 2014 will be an adjusted $0.07 to $0.08 per share. Wasson noted in the second quarter, Walgreen will be taking further steps to balance front-end sales and margin.

In the first quarter, the company opened or acquired 84 net new drugstores, compared with 128 in the year-ago quarter.

WAG closed Thursday's regular trading at $56.94 on the NYSE. In the pre-market activity, the shares are down 2.32 percent.