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Walgreens sees rare poor earnings results


DEERFIELD, Ill. Walgreens’ weak fourth quarter earnings missed analysts estimates for the year. Earnings per share were down year over year by a penny to 40 cents pe share but Thompson first call analysts called for 47 cents. For the fiscal year ended Aug. 31, net sales reached $53.8 billion from $47.5 billion in the year earlier. Net earnings advanced 16.6% to $2.04 billion. Net earnings per share for the fiscal 2007 year increased 18% to $2.03 per diluted share versus $1.72 per diluted share the previous year.

When Walgreens missed analysts’ estimates, its share price tumbled. The Oct. 1 announcement of fourth quarter and annual sales were bad news not only on a numerical basis. Walgreens said the fourth quarter trouble reflected higher expenses and lower reimbursements for popular generic medications, with management warning that the problems wouldn’t be isolated to the quarter.

Walgreens shares had been on a roll in September, topping off at $48.09 on Sept. 27. By Oct. 2, after Walgreens results were released, shares had hit a bottom of $38.66, yet rebounding to $40.05 on Oct. 3. Yet, that was below the range where the shares have typically traded over the past three months. At least one analyst said benefits drug chains have enjoyed from generic drug margin benefits are being squeezed and predicted problems for the channel in general.

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