Thursday, April 24th7.8°C
19345

Drugstore chain Walgreen reports 68 per cent jump in fiscal 1Q profit, helped by Alliance Boots

Walgreen's fiscal first-quarter earnings soared 68 per cent as investments in other companies paid off for the nation's largest drugstore chain, but a slowdown in generic drug introductions helped squeeze profitability.

The Deerfield Ill., company said Friday that it booked a total of $376 million in income during the quarter that ended Nov. 30 from its stakes in European health and beauty retailer Alliance Boots and U.S. pharmaceutical wholesaler AmerisourceBergen Corp.

Last year, Walgreen Co. acquired a 45 per cent stake in Alliance Boots, which runs the largest drugstore chain in the United Kingdom, and it has an option to buy the rest of the company in 2015. Earlier this year, it also bought an ownership stake in AmerisourceBergen and entered a supply agreement with the company.

Analysts have said they like the potential for growth that these deals give Walgreen, which runs 8,200 drugstores.

Overall, Walgreen earned $695 million, or 72 cents per share, in a fiscal first-quarter performance that matched analyst expectations. That was up from $413 million, or 43 cents per share, a year ago, when the company absorbed Alliance Boots deal charges and took a $24 million hit after Superstorm Sandy forced it to temporarily close hundreds of stores.

Revenue climbed 6 per cent to $18.33 billion, while analysts forecast $18.35 billion, according to FactSet.

Walgreen said prescription sales at stores open at least a year jumped 7.2 per cent in the quarter, while sales from the front end, or the store areas outside its pharmacy, climbed 2.4 per cent. Revenue from established stores is a key indicator of a retailer's health, because it excludes the impact from recently opened or closed stores.

CEO Greg Wasson told analysts during a Friday morning conference call that Walgreen has administered 1.1 million more flu shots than it did last year, despite a slow start to the cough, cold and flu season. He said that will help the company's non-flu vaccine program.

"We continue to see tremendous potential to grow our share of this $7.4 billion market," he said

The drugstore chain's pharmacy business benefited last year from a wave of new generic drugs, which hurt revenue but help profit. The company didn't see the same wave this year and that, along with increased promotions, pushed its profit as a percentage of sales down slightly to 28.1 per cent.

"We are continuing to see a value-conscious consumer and the impact of a soft economy," Wasson said.

He said the company hopes to make better use in future promotions of information it gets on customer buying habits from its Balance Rewards program, which Walgreen started last year. The customer loyalty program allows shoppers to gain points at both Walgreen and Duane Reade stores and for online purchases that translate into cash rewards they can then use at the stores.

Walgreen shares climbed 50 cents to $57.44 Friday morning while the Standard & Poor's 500 index also rose slightly. The stock was up 54 per cent so far this year through Thursday.

The shares have set new all-time high prices several times in 2013, according to FactSet.

The Canadian Press


Read more Business News

21100


Recent Trending




Today's Market
S&P TSX14554.25+20.86
S&P CDNX1014.453.47
DJIA16501.650.00
Nasdaq4148.338+21.372
S&P 5001878.61+3.22
CDN Dollar0.9072-0.0002
Gold1291.30+7.1001
Oil102.15-2.22
Lumber334.20+2.30
Natural Gas4.707+0.002

 
Okanagan Companies
Pacific Safety0.11-0.005
Knighthawk0.01-0.005
QHR Technologies Inc1.35+0.13
Cantex0.05+0.005
Anavex Life Sciences0.36-0.02
Metalex Ventures0.075-0.005
Russel Metals31.48+0.18
Copper Mountain Mining2.49+0.16
Colorado Resources0.265-0.005
ReliaBrand Inc0.11+0.03
Sunrise Resources Ltd0.03+0.005
Mission Ready Services0.250.00

 



20880

FEATURED Property
17869501916 Boone Court, Kelowna, BC
10079849 bedrooms
$950,000
more details
image2image2image2
Click here to feature your property
Please wait... loading


On living and dying

Our ability to live beyond our years has nothing to do with medical science; we will all live longer than our physical bodies, each of us will leave behind a personal legacy made up of our deeds, our ...


Learning to flirt with the edge

With all of the adventure activities I have done and still do, I wonder sometimes if the edge still exists. The systematic approach to learning a new adventure or extreme activity combined with the r...


Time spent prospecting

How much time should you put into prospecting? The question is a bit of a puzzle. Ideally, there would be a reference book that lists, by industry, how much time you should invest in prospecting acti...

_



21637




Member of BC Press Council