Tags: US | Earns | Walgreen

Walgreen's Profit Climbs as Prescription Sales Rise

Tuesday, 23 Mar 2010 09:28 AM

Walgreen Co., the largest U.S. drugstore chain, said Tuesday that even while the flu season has tapered off dramatically in the last few months, its profit rose 4.5 percent during the fiscal second quarter on a boost in prescription drug sales.

The company said it earned $669 million, or 68 cents per share, up from $640 million, or 65 cents per share, a year earlier. Revenue rose 3.1 percent to $16.99 billion from $16.48 billion.

Analysts surveyed by Thomson Reuters, on average, expected profit of 71 cents per share on $17.17 billion in revenue. In premarket trading, Walgreen shares rose 27 cents to $35.60.

The company said a weak flu season hampered sales of cough, cold and flu-related products. Walgreen said the percentage of physician visits by patients with flu symptoms fell to 1.8 percent in late February, from a record 7.7 percent in late October, citing the Centers for Disease Control and Prevention.

Walgreen sold about 5 million flu shots from September to November as fears of the swine flu outbreak helped boost demand. The company said it gave about 2 million vaccinations from December to February. Late February is usually the peak of the flu season.

"As much as the early flu season helped our first-quarter results, it hurt our second-quarter results," said President and CEO Greg Wasson. Due to the weaker flu season and decreased sales of discretionary items, sales at stores open at least a year fell 0.2 percent.

Walgreen's prescription revenue increased 3.2 percent as more customers filled 90-day prescriptions. Prescription sales rose just under 1 percent at stores open at least a year.

Sales of other items, like magazines, cosmetics, and food, fell 1.6 percent at stores open at least a year.

Sales open at least year are a key measure of a retailer's health because they show how existing stores are faring.

Second-quarter results also included ongoing restructuring costs.

Meanwhile, the company is in the midst of buying New York City drugstore chain Duane Reade, as part of a deal announced in February. When completed, the deal will make Walgreen the leading drugstore operator in the city.

Walgreen acquired or opened 41 stores during the quarter. At the end of February, it ran 7,180 stores in all 50 states, along with Puerto Rico, Guam, and Washington, DC. The company also has 500 worksite health centers, home care facilities, and specialty and other pharmacies.

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