Walgreens' vital signs good in Q1

Walgreens said stronger sales from established stores helped it trump analyst expectations for the first quarter, even as the company's acquisition of European retailer Alliance Boots remains on track to close this month.

Walgreens reported a 16.4% lift in quarterly profit to $809 million that was credited to the 222 million prescriptions filled for the first quarter ended Nov. 30.

Share price rose higher than $76.30, representing a more than $2 jump. Net earnings per diluted share for the quarter increased 18.1% to 85 cents, compared with 72 cents per diluted share in the year-ago quarter.

“This quarter we had solid performance across both our pharmacy and retail products businesses,” outgoing Walgreens president and CEO Greg 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, as we grew gross profit dollars faster than our costs during the quarter. We also completed our financing to close the Alliance Boots transaction as we move toward our shareholder vote on Dec. 29 to finalize the merger, ahead of our original goal. This truly is an extraordinary time for Walgreens as we achieve our vision of becoming a pharmacy-led, global enterprise for health and well-being with Alliance Boots.”

Alliance Boots contributed 11 cents per diluted share to Walgreens' first quarter 2015 adjusted EPS. The combined synergies for Walgreens and Alliance Boots in the first quarter were approximately $140 million and remain on track to reach at least $650 million in fiscal 2015.

Pharmacy sales, which accounted for 66.8% of sales in the quarter, increased 9% compared to the year-ago quarter, while pharmacy sales in comparable stores increased 8.1%.

The company filled a record 222 million prescriptions in the quarter, an increase of 4.3% over last year’s first quarter. Prescriptions filled in comparable stores increased 4.1% in the quarter.

As of Nov. 30, Walgreens' retail prescription market share on a 30-day adjusted basis reached 19%, as reported by IMS Health.

First quarter sales increased 6.7% compared with the prior-year quarter to a record $19.6 billion, with total sales in comparable stores increasing 5.7%. Front-end, or retail products, same store sales increased 1.5% in the first quarter compared with last year’s first quarter. While customer traffic in same stores decreased 2.7%, basket size increased 4.2%.

Source: Retailing Today