Walgreen Co.'s (WAG) fiscal fourth-quarter earnings jumped 86% as pharmacy section's sales continued to improve and as an accounting provision and higher acquisition-related costs weighed on its year-earlier results.
The company's margins also improved slightly in the latest period. Drugstore retailers like Walgreen have posted higher gross margins of late, aided by a wave of generic-drug offerings that carry higher profitability than nongenerics. However, generic drugs also command lower prices.
The shift in consumers' drug purchases toward generics has led pharmacy companies to take steps to improve their performance--including a recent alliance by Walgreen and European drug giant Alliance Boots GmbH with drug wholesaler AmerisourceBergen Corp. (ABC).
Chief Executive Greg Wasson said the company saw improvement in its daily-living business, resulting from investments and enhanced execution. Meanwhile, the company's pharmacy business also continued to strengthen and the company increased its retail-pharmacy market share for the year to 19.1%, he added.
For the quarter ended Aug. 31, Walgreen reported a profit of $657 million, or 69 cents a share, up from $353 million, or 39 cents a share, a year earlier. The latest period included income of one cent related to the last-in-first-out accounting method, while the year-before period included a LIFO provision of 10 cents a share. Excluding the LIFO impacts, acquisition-related expenses and amortization, costs related to its Alliance Boots deal and other special items, per-share earnings rose to 73 cents from 63 cents.
Revenue rose 5.1% to $17.94 billion. Total same-store sales were up 4.6% as same-store sales increased 1.6% in the front of the store and were up 6.4% in the pharmacy section.
Analysts polled by Thomson Reuters most recently projected earnings of 72 cents on revenue of $17.95 billion.
Gross margin widened slightly to 28.9% from 28.3%.
Same-store customer traffic slipped 1.9% while basket size improved 3.6%.
Shares were up 50 cents to $54.30 premarket. The stock is up 45% since the start of the year.
Write to Nathalie Tadena at email@example.com
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(END) Dow Jones Newswires
October 01, 2013 08:35 ET (12:35 GMT)Copyright (c) 2013 Dow Jones & Company, Inc.
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