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Walgreen fiscal 2Q profit drops less than 1 pct

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Walgreen’s fiscal second quarter earnings slipped from a year ago as the nation’s largest drugstore chain reaped a smaller benefit from generic drugs and took a $60 million hit due to rough winter weather.

But the Deerfield, Ill., company’s underlying performance impressed investors, and its shares rose, approaching the all-time high that they reached last month.

Walgreen executives said Tuesday that a wave of new generic drug introductions peaked in last year’s quarter, which helped the company’s bottom line then but made comparisons difficult for this year’s quarter.

Generic drugs, which are cheaper alternatives to branded medicines, squeeze drugstore sales but improve profitability because they come with a wider margin between the cost for the pharmacy to purchase the drugs and the reimbursement it receives.

The company said Tuesday that the tough comparison between this year’s quarters and last year will ease later this year. Walgreen expects generics to start helping its year-over-year performance again by the end of the fiscal year.

Walgreen said a tough winter also affected its performance in the quarter by keeping customers away from its stores, forcing it to temporarily close some locations and adding about $23 million in snow removal costs.

Overall, Walgreen Co. earned $754 million, or 78 cents per share, in the quarter that ended Feb. 28. That’s down from $756 million, or 79 cents per share, a year ago.

Adjusted earnings were 91 cents per share. Analysts expected 93 cents per share, according to FactSet.

Its revenue rose to about 5 percent to $19.61 billion and matched Wall Street expectations.

Walgreen competitor CVS Caremark Corp. made a big splash nationally last month when it said it planned to phase out tobacco product sales from its stores by October. Walgreen stores still sell tobacco, and an analyst asked CEO Greg Wasson during a Tuesday morning conference call whether the company would stick with it unless such sales a banned by a local government.

Wasson didn’t address the future of tobacco sales. Instead, he emphasized that the drugstore chain has pharmacists who can help people quit as well as smoking cessation products.

“We think we’re well-positioned to help folks change their behavior,” he said.

Gabelli Funds portfolio manager Jeff Jonas said Walgreen stores may gain some business from smokers once CVS quits selling tobacco.

“We’re in an environment right now where traffic is really tough to come by … so every little bit helps,” he said.

Walgreen shares rose $1.95, or 3 percent, to $66.26 after rising as high as $68.15 earlier in the day. The stock started 2014 strong, hitting an all-time high price of $69.84 at the end of last month.

Walgreen fiscal 2Q profit drops less than 1 pct

KDWN

Walgreen’s fiscal second quarter earnings slipped compared with last year, as a slowdown in generic drug introductions and bad weather contributed to a performance that missed Wall Street’s profit expectations.

The drugstore chain and its competitors have been helped in recent quarters by an influx of generic drugs. These cheaper alternatives to branded medicines squeeze sales but help profitability because they come with a wider margin between the cost for the pharmacy to purchase the drugs and the reimbursement it receives.

But that benefit has waned as the flood of new generic drugs seen in recent years has slowed. Walgreen Co. said Tuesday that its revenue managed to grow 5 percent in its fiscal quarter despite that challenge, severe weather that tends to keep customers away from its stores and a comparison to last year’s more-severe flu season, which generated more business.

Overall, the nation’s largest drugstore chain earned $754 million, or 78 cents per share, in the quarter that ended Feb. 28. That’s down from $756 million, or 79 cents per share, a year ago. Adjusted earnings were 91 cents per share.

Analysts expected 93 cents per share, according to FactSet.

Its revenue rose to $19.61 billion from $18.65 billion a year ago and matched Wall Street expectations.

The Deerfield, Ill., company also said it plans to close 76 stores in the second half of its fiscal year “to optimize the company’s asset base.” That represents a small slice of its total of 8,210 and a big shift from its previous growth strategy, which focused on opening locations to maximize convenience for its customers.

Walgreen shares rose $2.09, or 3.3 percent, to $66.40 in premarket trading about 45 minutes before markets opened Tuesday and after the company reported its quarterly results. The stock started 2014 strong, hitting an all-time high price of $69.84 at the end of last month before retreating. Shares were up 12 percent so far this year, as of Monday’s close.

Walgreen fiscal 2Q profit drops less than 1 pct

KDWN

Walgreen’s fiscal second quarter earnings slipped compared with last year, as a slowdown in generic drug introductions and bad weather contributed to a performance that missed Wall Street’s profit expectations.

The drugstore chain and its competitors have been helped in recent quarters by an influx of generic drugs. These cheaper alternatives to branded medicines squeeze sales but help profitability because they come with a wider margin between the cost for the pharmacy to purchase the drugs and the reimbursement it receives.

But that benefit has waned as the flood of new generic drugs seen in recent years has slowed. Walgreen Co. said Tuesday that its revenue managed to grow 5 percent in its fiscal quarter despite that challenge, severe weather that tends to keep customers away from its stores and a comparison to last year’s more-severe flu season, which generated more business.

Overall, the nation’s largest drugstore chain earned $754 million, or 78 cents per share, in the quarter that ended Feb. 28. That’s down from $756 million, or 79 cents per share, a year ago. Adjusted earnings were 91 cents per share.

Analysts expected 93 cents per share, according to FactSet.

Its revenue rose to $19.61 billion from $18.65 billion a year ago and matched Wall Street expectations.

The Deerfield, Ill., company also said it plans to close 76 stores in the second half of its fiscal year “to optimize the company’s asset base.” That represents a small slice of its total of 8,210 and a big shift from its previous growth strategy, which focused on opening locations to maximize convenience for its customers.

Walgreen shares rose $2.09, or 3.3 percent, to $66.40 in premarket trading about 45 minutes before markets opened Tuesday and after the company reported its quarterly results. The stock started 2014 strong, hitting an all-time high price of $69.84 at the end of last month before retreating. Shares were up 12 percent so far this year, as of Monday’s close.

Walgreen fiscal 2Q profit drops less than 1 pct

KDWN

Walgreen’s fiscal second quarter earnings slipped compared with last year, as a slowdown in generic drug introductions and bad weather contributed to a performance that missed Wall Street’s profit expectations.

The drugstore chain and its competitors have been helped in recent quarters by an influx of generic drugs. These cheaper alternatives to branded medicines squeeze sales but help profitability because they come with a wider margin between the cost for the pharmacy to purchase the drugs and the reimbursement it receives.

But that benefit has waned as the flood of new generic drugs seen in recent years has slowed. Walgreen Co. said Tuesday that its revenue managed to grow 5 percent in its fiscal quarter despite that challenge, severe weather that tends to keep customers away from its stores and a comparison to last year’s more-severe flu season, which generated more business.

Overall, the nation’s largest drugstore chain earned $754 million, or 78 cents per share, in the quarter that ended Feb. 28. That’s down from $756 million, or 79 cents per share, a year ago. Adjusted earnings were 91 cents per share.

Analysts expected 93 cents per share, according to FactSet.

Its revenue rose to $19.61 billion from $18.65 billion a year ago and matched Wall Street expectations.

The Deerfield, Ill., company also said it plans to close 76 stores in the second half of its fiscal year “to optimize the company’s asset base.” That represents a small slice of its total of 8,210 and a big shift from its previous growth strategy, which focused on opening locations to maximize convenience for its customers.

Walgreen shares rose $2.09, or 3.3 percent, to $66.40 in premarket trading about 45 minutes before markets opened Tuesday and after the company reported its quarterly results. The stock started 2014 strong, hitting an all-time high price of $69.84 at the end of last month before retreating. Shares were up 12 percent so far this year, as of Monday’s close.