Walgreen Co, the biggest US drugstore chain by revenue, reported Q1 results above analysts expectations, boosted by cost cuts and robust pharmacy sales.
For the first quarter ended November 30, Walgreen stated a 6.7% yearly increase in sales to $19.6 billion, helped by a company record of 222 million filed prescriptions, or 4.3% more compared to a year earlier.
Pharmacy sales, which accounted for slightly more than two-thirds of all sales, increased 9% compared to a year-ago levels. Walgreens retail prescription market share edged up to 19%.
Earnings per share for the quarter stood at $0.81, up from $0.72, on a net income of $809 million, a 16% increase from the $695 million reported last year.
Analysts surveyed by Thomson Reuters had projected earnings per share at $0.75 and a revenue of $19.5 billion.
Deerfield, Illinois-based Walgreen said its customer traffic fell 2.7%, however, the decline was offset by a 4.2% increase in basket size.
The strong quarterly performance came a week ahead of a shareholder vote on the $15.3 billion deal with health and beauty chain Alliance Boots to acquire the remaining 55% of it that Walgreen doesnt already own.
Alliance Boots contributed $0.11 cents per share to the companys results, with around $140 million of combined synergies, in line with Walgreens plan to reach at least $650 million in the fiscal 2015.
The move to acquire the rest of Alliance Boots would increase Walgreens store count to 11 000 and extend its global reach to more than 10 countries.
The deal with the Bern, Switzerland-based company also came at a time when some of Walgreen’s top executives, including CFO Wade Miquelon, left the company. Managers from Alliance Boots were appointed to take the positions.
CEO Greg Wasson will step down once the deal closes, and be succeeded, on an interim basis, by Alliance Boots’ Chairman Stefano Pessina, who became the largest shareholder in Walgreen during the acquisition.
“This quarter we had solid performance across both our pharmacy and retail products businesses,” Mr. Wasson said. “We truly appreciate that our 8,200-plus store teams exceeded the overall retail market in year-over-year sales growth heading into the holiday season.”
Walgreen Co. gained 1.42% on Monday and closed at $74.27 in New York. The stock edged up 0.92% on Tuesday to trade at $74.95 at 15:18 GMT, marking a one-year increase of 30.33%. The company is valued at $70.59 billion. According to the Financial Times, the 19 analysts offering 12-month price targets for Walgreen have a median target of $70.00, with a high estimate of $80.00 and a low estimate of $56.00. The median estimate represents a 5.75% decrease from the last close price of $74.27.
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