The Clinton Herald, Clinton, Iowa

Business & Technology

December 21, 2013

Walgreen's 1Q profit jumps 68 pct

DEERFIELD, Ill. — Walgreen’s fiscal first-quarter earnings soared 68 percent 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 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 percent 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 percent 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 percent in the quarter, while sales from the front end, or the store areas outside its pharmacy, climbed 2.4 percent. 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.

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