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Walgreens sees adjusted earnings rise on flat 2Q sales
March 19th, 2013
DEERFIELD, Ill. – Walgreen Co. posted flat sales and adjusted earnings in line with Wall Street's forecast for its fiscal 2013 second quarter.
Walgreens said Tuesday that for the second quarter ended Feb. 28, adjusted net income came in at $915 million, or 96 cents per diluted share, compared with $767 million, or 88 cents per diluted share, a year earlier.
The company noted that the adjusted results exclude the negative impacts of 12 cents per diluted share in acquisition-related items and 5 cents per diluted share from the quarter's LIFO provision.
Financial analysts, on average, had projected adjusted earnings of 94 cents per share, with estimates ranging from a low of 87 cents to a high of $1.03, according to Thompson Financial.
Walgreens said GAAP net earnings for the fiscal 2013 second quarter were $756 million, or 79 cents per diluted share, compared with $683 million, or 78 cents per diluted share, in the prior-year period. The company added that last year's results reflect one extra day because of leap year.
On the revenue side, sales for the second quarter were flat at $18.65 billion, with same-store sales declining 2.6%.
Front-end comparable-store sales in the quarter fell 2.6% year over year. Customer traffic in comparable stores was down 5.2%, and basket size grew 2.8%, Walgreens said.
Prescription sales, which represented for 61.1% of sales in the second quarter, were flat, while comparable pharmacy sales decreased 2.7%. Walgreens said it filled 208 million prescriptions in the quarter, up 6% from a year earlier. Prescriptions filled in comparable stores rose 4.3% in the quarter.
Walgreens noted that all second-quarter comp-store sales and prescription figures reflect 29 days in February 2012.
The company added that as of Feb. 28, it had increased its retail prescription market share by 50 basis points from the end of its fiscal 2013 first quarter on Nov. 30, 2012, to 19.2%.
Flu shots administered at pharmacies and clinics this flu season through Feb. 28 totaled 7 million, compared with 5.5 million a year ago.
"We are pleased with the quarter's results, as we saw substantial strength in our pharmacy performance, leading to strong earnings growth," Walgreens president and chief executive officer Greg Wasson said in a statement. "With our Balance Rewards program now totaling more than 60 million enrollments, our preferred status with four national Medicare Part D plan sponsors, and our very successful flu shot program this year, our customers are responding to our purpose to help them get, stay and live well."
For the fiscal 2013 first half ended Feb. 28, adjusted net earnings were $1.47 billion, or $1.54 per diluted share, compared with $1.39 billion, or $1.59 per diluted share, in the year-ago period.
According to Walgreens, the 2013 adjusted first-half results exclude the negative impacts of 18 cents per diluted share in acquisition-related items and 8 cents per diluted share from the first half's LIFO provision. Special items in the first half of the year included 3 cents per diluted share in costs related to Hurricane Sandy and 3 cents per diluted share in acquisition-related costs, offset by 1 cent per diluted share in additional proceeds from the 2011 sale of the company's pharmacy benefit manager business.
GAAP net earnings for the 2013 first half came in at $1.17 billion, or $1.23 per diluted share, compared with $1.24 billion, or $1.41 per diluted share, a year earlier.
Walgreens added that its synergy program with joint venture partner Alliance Boots remains on track to deliver its first-year target of $100 million to $150 million in combined synergies.
"Alliance Boots' contribution to our results was in line with our expectations this quarter, and we anticipate that to continue in the second half of our fiscal year," Wasson stated.
Earlier on Tuesday, Walgreens and Alliance Boots announced a long-term distribution and supply partnership with AmerisourceBergen Corp., including the right to buy an equity stake in the pharmaceutical wholesaler.
Walgreens said that in the second quarter, it opened or acquired 29 new drug stores, compared with 35 in the year-ago quarter. As of Feb. 28, Walgreens operated 8,072 drug stores, 231 more than a year ago.