Walgreen Company Earnings Not What the Doctor Ordered


Walgreen Co. (NYSE: WAG) reported third-quarter fiscal 2013 results before markets opened this morning. The drugstore chain reported adjusted diluted earnings per share (EPS) of $0.85 on revenues of $18.31 billion. In the same period a year ago, Walgreen reported EPS of $0.72 on revenue of $17.75 billion. Third-quarter results also compare to the consensus estimates for EPS of $0.91 and $18.43 billion in revenue.

Walgreen did not offer guidance in its earnings release. The consensus fourth-quarter estimate calls for EPS of $0.81 on revenues of $18.07 billion. For the full 2013 fiscal year, the consensus estimates call for EPS of $3.27 on revenues of $72.47 billion. To meet the full-year EPS estimate, Walgreen will need to beat the fourth-quarter estimate by $0.07 a share. Possible, but not likely.

The company's CEO said:

[O]ur front-end sales are still not up to our expectations, and while the economy remains challenging, increasing customer traffic and front-end sales are our near-term priorities with a focus on pricing and promotion and the leveraging of our Balance® Rewards program, which now has 75 million members.

Prescription sales rose 3.4% year-over-year and same-store prescription sales rose 2%. Prescription sales accounted for 63.1% of total sales in the quarter.

Gross margins rose 30 basis points to 28.5%, as a result of an increase in sales of generic prescription drugs and better front-end sales.

Shares are inactive in premarket trading this morning, having closed at $48.05 last night in a 52-week range of $28.82 to $51.25. Thomson Reuters had a consensus analyst price target of around $50.35 before today's results were announced.

Filed under: Retail Tagged: WAG