Walgreen Tops Expectations On Pharmacy Strength

Walgreen Co. (WAG) said strong pharmacy sales helped drive better-than-expected results in its November quarter.

The upbeat results come less than a week before a shareholder vote on Walgreen’s deal to buy the rest of drugstore chain Alliance Boots GmbH–a move that would expand Walgreen from a U.S. operation with 8,200 locations to a global one, doing business in more than 10 countries with more than 11,000 total locations.

Walgreen, worried about the possible public reaction, decided not to move its headquarters offshore to lower its tax bill as part of the deal.

Shareholders are set to vote on the deal next Monday, and the two prominent shareholder advisory firms, Glass, Lewis & Co. and Institutional Shareholder Services Inc., have given the deal their blessing.

The combination is aimed at giving the companies greater scale and purchasing power at a time when lower drug reimbursement rates and higher costs for generic drugs are hurting profits.

Walgreen shocked investors in August when it slashed its long-term profit forecast because it had failed to account for a rapid rise in the price of generics as it negotiated contracts to provide prescription drugs under Medicare’s Part D program.

The bungled generics forecast led to the departure of two top executives when it came to light, including Chief Financial Officer Wade Miquelon.

Walgreen is also relying on higher margin from selling items such as beauty products in the front end of the stores as well as massive cost cuts to offset the pressure in its pharmacy division is facing. The company is accelerating some of the cost cuts, including a hiring freeze for the rest of the year.

For the fiscal first-quarter ended Nov. 30, the company’s selling, general and administrative expenses inched up 1.8%.

Overall, Walgreen posted a profit of $809 million, or 85 cents a share, compared with a profit of $695 million, or 72 cents a share, in the prior-year period.

Excluding one-time items, per-share earnings were 81 cents, compared with 72 cents a year ago.

Revenue improved 6.7% to $19.6 billion. Analysts polled by Thomson Reuters had projected 75 cents a share in earnings and $19.5 billion in revenue.

Sales, excluding newly opened or closed locations, rose 5.7%, including a 1.5% increase for front of the store sales. Pharmacy sales, excluding newly opened or closed locations, increased 8.1% as the stores filled 4.1% more prescriptions.

Customer traffic fell 2.7%, and basket size grew 4.2%.

Source Article from http://www.foxbusiness.com/industries/2014/12/23/walgreen-tops-expectations-on-pharmacy-strength/
Walgreen Tops Expectations On Pharmacy Strength
pharmacy – Yahoo News Search Results
pharmacy – Yahoo News Search Results


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