Drug store chain Walgreen Co. (WAG) announced a quarterly profit Monday that dropped from last year, despite a nearly 7 percent rise in sales. The company said it continues to aggressively manage its expenses, including a further reduction in the rate of its new store openings.
Walgreens announced that its first-quarter net earnings dropped to $408 million, or $0.41 per share, compared to $456 million or $0.46 per share, in the same quarter a year ago.
Analysts had expected the company to report earnings of $0.46 per share for the first quarter.
Sales for the first quarter increased 6.6% to $14.9 billion from $14.03 billion in the year-ago quarter. Analysts had consensus revenue estimate of $15.08 billion.
Comparable stores sales, an important metric for a retailer's performance, which leaves out the impact of one-time items, rose 1.7% in the quarter, the company said.
Prescription sales accounted for 66 percent of its sales in the quarter and were up 6.2 percent from last year. On a comparable store sales basis, prescription sales were higher by 2.6 percent.
"We continue to post solid sales results and achieve strong cost control in this difficult retail environment," Walgreens President and COO Gregory Wasson said in a statement.
He added, "Customer traffic strengthened through the quarter and we're making substantial progress on our growth strategies to get more from our core operations and enhance the customer experience."
Selling, general and administrative expense dollars rose 9.1 percent in the quarter, the company said, including costs associated with opening 212 new or acquired drugstores in the quarter - a record number for the firm.
The company revealed plans to further reduce its organic store openings, saying it now expected a rate between 4.0 and 4.5 percent in 2010 and between 2.5 and 3.0 percent in 2011.
Last July, the firm had said that it would slow organic store openings to 5 percent by 2011. The new growth rate will lead to a reduction in its capital expenditures for 2011 of about an additional $500 million.
"We believe that further slowing of organic store growth is a prudent step in the context of current economic conditions," Wesson said.
He added, "by freeing up human and financial capital, substantial upside exists to drive greater value creation by enhancing the best community-based store network in America."
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