Walgreen fourth quarter profit rises 8 percent, tops estimates
NEW YORK -- Walgreen Co., the largest drugstore chain in the U.S., said Tuesday its net income rose 8 percent in the fiscal fourth quarter on higher prescription drug sales.
The results were above analyst expectations, and Walgreen shares jumped almost 10 percent in late morning trading.
The company said the flu shot season has been brisk. Since the middle of August it has administered more than 2 million flu shots and sprays. Many of those sales are not included in its fourth-quarter results since the period ended Aug. 31, but Walgreen said it is aiming to sell 15 million flu shots this year. That's more than twice as many as the 7 million shots it sold in 2009-10.
Walgreen said prescription drug sales improved, and sales of other items like cosmetics and food were more profitable because of better prices and successful promotions. Sales of "front end" or nonpharmacy items have been hurt by the weak economy as shoppers have cut back on their spending.
The Deerfield company reported net income of $470 million, or 49 cents per share, for the quarter. That's up from $436 million, or 44 cents per share, a year earlier. Revenue rose 7 percent to $16.87 billion from $15.7 billion as the company continued to expand.
Analysts on average expected earnings of 44 cents per share and $16.84 billion in revenue, according to Thomson Reuters.
It said the results included 4 cents per share in expenses related to the purchase of Duane Reade, which closed in August and gave the company 258 stores. It reported a penny per share in costs from its restructuring plan. Walgreen expects to save $1 billion per year from that plan.
Walgreen shares rose $3, or 9.9 percent, to $33.35 in late morning trading.
Revenue at stores open at least a year rose 1.5 percent during the quarter, while prescription revenue at those stores rose 1.6 percent. Those comparisons are considered an important measurement of retailer health because they leave out results from stores the company opened, acquired, or closed over the previous year.
Walgreen runs 7,561 drugstores around the country. It has opened or acquired 564 locations in the last year, including the Duane Reade chain in New York City.
For the full fiscal year, the company reported net income of $2.09 billion, or $2.12 per share, up from $2.01 billion, or $2.02 per share, a year earlier. Revenue rose to $67.42 billion from $63.34 billion.
The company said it has remodeled and simplified the product lines at more than 1,800 stores in a plan that is designed to boost sales of non-pharmacy items and save money. It plans to renovate about 5,500 stores and said the changes are costing about $50,000 per store. Walgreen is also selling beer and wine at about 4,200 locations and expects to sell liquor at more than 5,000 stores by the end of this year.