Walgreen Co. posted a 1.6 percent decline in net income for the fourth quarter ended Aug. 31 on higher selling, general and administrative expenses, but nonetheless managed to beat Wall Street analysts’ earnings expectations.
The drugstore chain’s profits were $436 million, or 44 cents a diluted share, down from $443 million, or 45 cents, in the same period a year ago. Analysts on average had estimated EPS of 39 cents a share.
SG&A costs during the quarter rose 9.6 percent to $3.64 billion from $3.32 billion last year.
Fourth-quarter sales rose 7.6 percent to $15.7 billion from $14.6 billion in the year-ago period. Comparable-stores sales were up 2.4 percent in the quarter, while front-end comp drugstore sales declined 1.4 percent in the quarter, the company stated. Prescription sales, which accounted for 66.5 percent of revenues in the quarter, climbed 9 percent, while same-store prescription sales increased 4.5 percent, the firm added.
“We posted solid fourth-quarter results…and we’ve done this while navigating through the most severe economic downturn in decades,” said Walgreens president and chief executive officer Gregory D. Wasson. “Despite the tough environment, we’ve maintained our financial flexibility to invest in the right opportunities, while enhancing our relevancy to customers.”
Walgreens opened 149 new drugstores during the fourth quarter, compared with 199 in the year-ago quarter, the firm said, adding it expects organic store growth of between 4.5 and 5 percent in fiscal 2010 — and between 2.5 and 3 percent annually beginning in 2011.
“We’re now balancing the pace of new store openings with other growth opportunities,” said Wasson. “We’re determined to grow market share through continued organic store growth, increased comparable sales and pharmacy file buys. We’ll also continue evaluating potential acquisitions that reinforce our core strategies.”
In fiscal 2009, Walgreens had a net gain of 554 new drugstores, including 70 acquisitions, the company stated, adding that as of Aug. 31, 6,997 stores were in operation versus 6,443 a year ago. While the official opening of its 7,000th store, in Brooklyn, N.Y., will be celebrated Oct. 1, there are currently 7,042 stores in operation, more than any other U.S. drugstore chain.
For the full year, net earnings were down 7 percent to $2.01 billion, or $2.02 a diluted share, compared with $2.16 billion, or $2.17, in the prior year. Sales for the 12-month period increased 7.3 percent to $63.34 billion from $59.03 billion in fiscal 2008.
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