News Column

Walgreen Posts Sharp Profit Drop

Dec. 23, 2012

Mary Ellen Podmolik

Walgreen Co. reported a 25 percent decline in fiscal first-quarter profit Friday and said it continues to win back customers lost last year during its contract dispute with Express Scripts Holding Co.

The Deerfield-based company, the nation's largest drugstore chain, earned $413 million, or 43 cents a share, during the three months that ended Nov. 30, compared with $554 million, or 63 cents a share, in the year-ago period.

The lower-than-expected results pushed down shares of Walgreen to close at $36.31, down $1.24 or 3.3 percent, Friday.

First-quarter sales slipped 4.6 percent during the quarter, to $17.3 billion. Sales in stores open at least a year, a key measure because it does not include the effect of new store openings, fell 8 percent.

Prescriptions filled in stores open at least a year fell 4.8 percent from the comparable year-ago, but the decline was less than in the second and third quarters.

Executives attributed that improvement to Walgreen's continued efforts to woo back customers who shifted their prescriptions to other pharmacies early this year after a contract dispute between Walgreen and pharmacy benefits manager Express Scripts led them to part ways. Analysts estimated that the dispute amounted to an annual revenue loss of $4 billion for Walgreen.

The two companies renewed their relationship in midsummer, allowing customers to return to Walgreen in September. But during the dispute, rivals like Rite Aid Corp. and CVS Caremark Corp. scooped up new customers, and it showed in their quarterly earnings reports.

In an early morning conference call, Walgreen President and CEO Greg Wasson downplayed concerns by analysts trying to reconcile how all the companies say they are keeping customers. "We're certainly feeling good with where we are," Wasson said. "They're coming from every player. We feel good with our win-back."


Distributed by MCT Information Services

Source: (c) 2012 the Chicago Tribune

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