Walgreen Profit Falls 55% on Express Scripts Fallout

by Christopher Freeburn | September 28, 2012 10:58 am

Walgreen (NYSE:WAG[1]) announced on Friday that it earned $353 million during its fiscal fourth quarter[2], down 55% compared to $792 million in the same period last year. Adjusted EPS was 63 cents, beating Wall Street, which had anticipated 55 cents a share, Bloomberg noted.

For the quarter, revenue declined to $17.1 billion, down 5% from $18 billion last year.

Company officials said that the quarter’s earnings were hit by charges relating to its purchase of a 45% stake in Swiss pharmacy chain Alliance Boots, its first overseas acquisition[3], and higher inventory costs.

The Alliance Boots deal resulted in a charge of 9 cents per share against earnings, while inventory costs amounted to charge of 10 cents per share.

For fiscal 2012, Walgreen reported income of $2.13 billion and revenue of $71.63 billion.

Sales during the quarter continued to feel the impact of the end of its relationship with Express Scripts (NASDAQ:ESRX[4]). The loss of Express Scripts caused some customers to migrate to rivals, including CVS Caremark (NYSE:CVS[5]) and Rite Aid (NYSE:RAD[6]).

However, the two company’s have since re-established their business relationship[7], which commenced again this month.

Shares of Walgreen slipped more than 1% in Friday morning trading.

  1. WAG: http://studio-5.financialcontent.com/investplace/quote?Symbol=WAG
  2. during its fiscal fourth quarter: http://www.businessweek.com/ap/2012-09-28/walgreen-4q-profit-falls-55-pct-tops-forecasts
  3. its first overseas acquisition: http://investorplace.com/2012/06/walgreens-to-pay-6-7b-for-stake-in-alliance-boots/
  4. ESRX: http://studio-5.financialcontent.com/investplace/quote?Symbol=ESRX
  5. CVS: http://studio-5.financialcontent.com/investplace/quote?Symbol=CVS
  6. RAD: http://studio-5.financialcontent.com/investplace/quote?Symbol=RAD
  7. re-established their business relationship: http://investorplace.com/2012/07/walgreen-jumps-on-express-scripts-deal/

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