June 22 (Bloomberg) -- Walgreen Co., the second-largest U.S. drugstore chain, said third-quarter profit fell 8.7 percent because of costs to change its product mix and open new stores.

Net income declined to $522 million, or 53 cents a share, in the three months ended May 31 from $572 million, or 58 cents, a year earlier, the Deerfield, Illinois-based company said today in a statement. Sales advanced 8 percent to $16.2 billion.

Rising unemployment and declining home values are causing some consumers to conserve funds by purchasing only the most essential items, Walgreen has said. Selling and administrative costs increased as the company refocused on everyday necessities like milk and soap. It opened 162 new drugstores in the quarter, compared with 122 a year earlier and 45 in the second quarter.

The retailer was projected to earn 56 cents a share, the average of 19 analysts’ estimates compiled by Bloomberg. Sales were seen at $16.2 billion by 16 analysts.

Walgreen fell $1.79, or 5.7 percent, to $29.64 at 4:02 p.m. in New York Stock Exchange composite trading. The shares have advanced 20 percent this year.

To contact the reporter on this story: Carol Wolf in Washington at cwolf@bloomberg.net.

Last Updated: June 22, 2009 16:24 EDT