Walgreen Q2 profit down 7%

Deerfield, Ill. Citing costs due to restructuring, Walgreen Co. said Monday its profit fell 7% in its fiscal second quarter, even as retail prescriptions grew.

The company said it earned $640 million, compared with $686 million a year ago. That includes restructuring expenses of $93 million. Sales grew 7% to $16.48 billion, from $15.39 billion.

Thomson Reuters said analysts expected sales of $16.42 billion.

In January, Walgreen said it would cut 1,000 jobs to reduce overhead, part of a plan to save the company $1 billion per year by 2011 by reducing costs, slowing store openings and eliminating jobs. The plan is expected to cost $300 million to $400 million in fiscal 2009 and 2010, but lead to $500 million in savings in fiscal 2010 and $1 billion the following year.

CEO Gregory Wasson, chief since January, said the economy was affecting sales. In a conference call, he said sales rose for such nondiscretionary items as skin care and beauty products, but sales of less-essential items were down. Adjusting for calendar shifts, he said customer traffic was about the same as it was a year ago.

The company said prescriptions grew 7.8% for the quarter. Same-store sales rose 1.3% because prescription sales rose.

Walgreens opened or bought 57 stores during the quarter, and closed or moved nine others. In February, Walgreens bought 12 Rite Aid stores in San Francisco and eastern Idaho, and last week, it acquired 32 New Jersey-based Drug Fair stores.