Walgreen Posts 59% Decline In Q4 Profit, Per Its Earnings Report

Walgreen Posts 59% Decline In Q4 Profit, Per Its Earnings Report
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Walgreen Company (NYSE:WAG) posted a profit of $353 million or 39 cents per diluted share, during the fourth quarter of fiscal 2012. The result was 59 percent lower than its $ 792 million or 87 cents per diluted share profit last year.

Walgreen Posts 59% Decline In Q4 Profit, Per Its Earnings Report

The company’s financial performance was affected by its split from Express Scripts Holding Company (NASDAQ:ESRX), and its acquisition of Alliance Boots GmBh, a drugstore operator in Europe.

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Based on the company’s financial report, Walgreen Company (NYSE:WAG)’s net earnings during the period were $553 million, or 63 cents per diluted share. During the same period a year ago, the company reported $599 million net earnings, or 66 cents per diluted share. According to the company, its earnings result excluded the negative impacts of its investments in Alliance Boots (9 cents per diluted share), LIFO provision (10 cents per diluted share), and acquisition-related amortization costs (5 cents per diluted share).

Walgreen Company (NYSE:WAG) total sales dropped by 5 percent, to $71.1 billion, compared with its $72.2 billion total sales during the same period in 2011. The company’s front-end comparable store sales declined by 8.7 percent, while its prescription sales decreased by 8.1 percent. The sales decline was primarily attributed to its separation with Express Scripts, which represents 10.7 percent of the company’s prescriptions in August.

The weak sales performance of the Deerfield-based pharmacy chain during the fourth quarter is expected, as the company reported a 4.5 percent sales drop last month.

The company’s net income for the current year was $2.13 billion, 22 percent lower than its $2.71 billion net income in 2011. Its operating income dropped by 21 percent to $3.46 billion, compared with its $4.37 billion operating income a year ago.

In a statement, Walgreen Company (NYSE:WAG) President and CEO Greg Wasson said, “This was a challenging, but very important year for Walgreens, and we finished with a tough quarter. While we controlled costs and generated strong cash flow in the fourth quarter, our performance also reflected a strategic shift in promotional spending, a continued economically challenged consumer, and the impact from Express Scripts. Entering the new fiscal year, we believe we are positioned for growth, as we benefit from the launch of our Balance Rewards loyalty program, our reentry into the Express Scripts pharmacy provider network, and our execution of the Alliance Boots strategic partnership.”

Walgreen Company (NYSE:WAG) stopped filling-up the prescriptions of the patients of Express Scripts Holding Company (NASDAQ:ESRX) in January, due to a pricing disagreement. A previous report from Reuters cited that both companies resolved their dispute in July and agreed to resume their business relationship in September.

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