Walgreen Profit Rises 86% as Loyalty Card Boost Sales

Walgreen Co. (WAG), the largest U.S. drugstore retailer, said fiscal fourth-quarter profit rose 86 percent after its customer-loyalty card boosted sales.

Net income increased to $657 million, or 69 cents per share, in the quarter ended Aug. 31 from $353 million, or 39 cents per share, a year earlier, the Deerfield, Illinois-based company said today in a statement. Excluding certain items, profit was 73 cents a share, matching the average of 20 analysts’ estimates compiled by Bloomberg.

Chief Executive Officer Gregory Wasson has used data from loyalty-card holders’ purchases to improve the selection of merchandise in the front of Walgreen’s stores. Sales at locations open at least 12 months advanced 4.6 percent in the quarter as the average purchase size increased 3.6 percent. The number of customers slipped 1.9 percent.

“While customer traffic remains challenged, we believe we are starting to see the benefit of Balance Rewards,” Deborah Weinswig, an analyst at Citigroup Inc. in New York, wrote in a note today. She recommends buying Walgreen shares.

Sales rose 5.1 percent to $17.9 billion.

Walgreen climbed 4.5 percent to $56.24 at the close in New York. The shares have advanced 52 percent this year compared with a 19 percent gain by the Standard & Poor’s 500 Index.

Photographer: Luke Sharrett/Bloomberg

A shpper pays for a purchase in the cosmetics section of a Walgreen Co. store in Louisville, Kentucky, on Sept. 30, 2013. Close

A shpper pays for a purchase in the cosmetics section of a Walgreen Co. store in... Read More

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Photographer: Luke Sharrett/Bloomberg

A shpper pays for a purchase in the cosmetics section of a Walgreen Co. store in Louisville, Kentucky, on Sept. 30, 2013.

To contact the reporter on this story: Chris Burritt in Greensboro at cburritt@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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