BUSINESS

Drugstore chain Walgreen reports 16 per cent jump in fiscal 3Q profit, but misses estimates

06/25/2013 07:59 EDT | Updated 08/25/2013 05:12 EDT
Walgreen Co.'s fiscal third quarter earnings jumped 16 per cent compared to last year but the performance still missed Wall Street expectations.

Shares of the nation's largest drugstore chain sank Tuesday almost 6 per cent in premarket trading.

The Deerfield, Ill., company reported net income of $624 million, or 65 cents per share, in the quarter that ended in May. That's up from $537 million, or 62 cents per share, a year ago, when the company had fewer shares outstanding.

Revenue rose about 3 per cent to $18.31 billion.

Adjusted earnings were 85 cents per share, excluding expenses such as acquisition and legal costs.

Analysts forecast earnings of 91 cents per share on $18.4 billion in revenue, according to FactSet.

A business split with the nation's largest pharmacy benefits manager, Express Scripts Holding Co., hurt Walgreen's performance in last year's quarter. The companies had a break of about nine months, and that caused many Walgreen customers to migrate to competitors for their prescriptions, at least temporarily, before resuming business last September.

Walgreen said Tuesday its results in this year's quarter were helped by its acquisition of a stake in European health and beauty retailer Alliance Boots, which contributed about 10 cents per share to the U.S. company's adjusted earnings. Walgreen announced that deal the same day it reported fiscal third quarter earnings last year.

Walgreen CEO Greg Wasson also said in a statement that drugstore chain's revenue from the front end of its stores, or the area outside pharmacy, missed the company's expectations. He said increasing that will be a near-term priority.

Walgreen runs nearly 8,100 drugstores. That's more than competitors CVS Caremark Corp. and Rite Aid Corp.

Its shares dropped $2.85, or 5.9 per cent, to $45.20 in premarket trading Tuesday an hour before the market opening.