Walgreen Has Record First Quarter

Deerfield, Ill., Walgreen Co. posted a record first quarter for both sales and earnings. The drug chain reported net income of $332.7 million for the quarter ended Nov. 30, an increase of 30.5% over the same quarter last year. Comp-store sales increased 9.4% as total sales for the quarter rose 13.4% to $9.9 billion. “Earnings this quarter were powered by solid prescription and general merchandise sales, as well as our second straight quarter of significantly higher gross profit margins,” said chairman and CEO Dave Bernauer.

Prescription sales, which accounted for 65% of sales in the quarter, climbed 14.4%. Prescription sales in comparable stores rose 11.3% in the quarter. Third-party plans now account for 93% of all prescription sales.

Costs associated with converting to digital-photo labs and payroll to improve customer service contributed to selling, occupancy and administration expenses increasing 62 basis points to 22.35 as a percent to sales. Also impacting the SO&A ratio were lower-priced generic drugs that slowed the company’s sales line.

Walgreen opened 111 new stores in the first quarter and plans to open about 450 new stores during fiscal 2005, for a net increase after closings and relocations of about 365 stores. At Nov. 30, Walgreens operated 4,680 drugstores in 44 states and Puerto Rico, vs. 4,291 a year ago, for a net increase of 389. Walgreens is on track to operate 7,000 stores in 2010.