Longs sees 33% growth in 2Q earnings

WALNUT CREEK, Calif. Longs Drug Stores Corp. today reported preliminary income from continuing operations for the second quarter ended July 26 of $25.7 million, or 67 cents per diluted share, a 33% increase compared with income from continuing operations for the second quarter ended July 27, 2006 of $19.4 million, or 51 cents per diluted share.

Total revenues of $1.27 billion for the thirteen weeks ended July 26, 2007 were 3% higher than the $1.24 billion reported in the comparable period last year. Total retail drug store sales increased 2.9% and total pharmacy benefit services revenues increased 4.8% compared with the same period last year.

Total revenues of $2.57 billion for the 26 weeks ended July 26 were 4.3% higher than the $2.47 billion reported in the comparable period last year. Total retail drug store sales were $2.38 billion, a 3.6% increase from $2.3 billion in the comparable period last year. Same-store sales increased 1.5% with pharmacy same-store sales increasing 2.4% and front-end same-store sales increasing 0.7%. Pharmacy sales were 51.9% of total drug store sales during the period, compared with 50.8% a year ago.

Pharmacy benefit services generated a 13.2% increase in revenues during the 26 weeks ended July 26 to $191 million compared with $168.7 million reported last year.

 The company is estimating a net loss from discontinued operations for the full year ending Jan. 31, 2008, in the range of zero to $1.4 million after- tax, or zero to 4 cents per diluted share, related to the disposition of 23 stores.

For the 53 weeks ending Jan. 31, 2008, Longs is estimating that total revenues from continuing operations will increase 5% to 7% and total retail drug store sales will increase 5% to 7%. The company estimates that same-store sales will increase 1% to 3% compared with last year. Management's outlook for income from continuing operations for fiscal 2008 is $2.33 to $2.43 per diluted share. Income from continuing operations for fiscal 2007 was $2.08 per diluted share.

For the third quarter ending Oct. 25, Longs is estimating that total revenues from continuing operations will increase 3% to 5% and total retail drug store sales will increase 2% to 4%. The company estimates that same-store sales will increase 1% to 3% compared with the third quarter of last year. Given these revenue assumptions and the company's continued progress on previously stated initiatives, Longs' goal is to achieve income from continuing operations in the range of 40 cents to 45 cents per diluted share. Income from continuing operations for the third quarter ended Oct. 26, 2006 was 35 cents per diluted share.