Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Walgreen Third-Quarter Profit Falls 11%; Shares Drop

Don't Miss Out —
Follow us on:
Walgreen third-quarter profit declines on Duane Reade costs
A sign sits at the Walgreen's pharmacy in New York. Photographer: JB Reed/Bloomberg

June 22 (Bloomberg) -- Walgreen Co., the largest U.S. drugstore chain, said third-quarter profit declined 11 percent as the company remodeled stores to spur sales growth. The shares fell 6.5 percent.

Net income dropped to $463 million, or 47 cents a share, from $522 million, or 53 cents, a year earlier, Walgreen said today in a statement. Excluding certain costs, profit was 53 cents for the three months ended May 31. Analysts projected 58 cents, the average of estimates compiled by Bloomberg.

A sluggish economy and a slowdown in the introduction of new generic drugs made the quarter challenging, Walgreen Chief Executive Officer Greg Wasson said. The Deerfield, Illinois-based company is working to reduce overhead expenses by $500 million this fiscal year, while spending as much as $55,000 a store to convert the chain to a new format.

“We expected these headwinds and are continuing our relentless focus on cost reductions,” Wasson said on a conference call. Lowering shelves in stores and expanding private-label goods will help boost sales next year, he said.

Walgreen fell $1.97 to $28.17 at 4:01 p.m. in New York Stock Exchange composite trading. The shares have declined 23 percent this year.

Duane Reade

Sales at stores open at least a year rose less than 1 percent in the quarter, excluding the Duane Reade Holdings Inc. chain that Walgreen purchased in April. Total revenue increased 6.1 percent to $17.2 billion.

The acquisition of Duane Reade, which has more than 250 outlets, shaved 2 cents a share from earnings. Changes in Medicare reimbursement policies clipped profit by 4 cents.

Earnings in the year earlier period were boosted by sales of over-the-counter remedies to fight the H1N1 flu virus.

CVS Caremark Corp., the biggest distributor of prescription drugs, and Walgreen resolved a dispute this month over reimbursement policies at CVS Caremark’s benefits plans. Walgreen had threatened to withdraw from CVS Caremark’s retail pharmacy network, which has more than 64,000 stores.

(Walgreen held a conference call at 8:30 a.m. available on http://investor.walgreens.com.)

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

To contact the editor responsible for this story: Jennifer Sondag at jsondag@bloomberg.net.

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.