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Walgreen (WAG) Misses Q1 Expectations on Costs; Still Feels Express Scripts Impact

December 21, 2012 7:54 AM EST Send to a Friend
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Walgreen (NYSE: WAG) shares are down pretty good in early trading following first-quarter 2013 results that missed the market on both fronts: earnings and sales.

Revenue for the Deerfield, IL-based retail pharmacy giant slipped 4.6 percent to $17.32 billion. Net income plummeted 25.5 percent to $413 million, or 43 cents per share. Exuding one-time items like amortization costs and LIFO provisions, EPS was more robust at 58 cents.

The Street consensus called for revs of $17.43 billion and EPS of 70 cents.

Front-end comps fell 2.0 percent. The number stems from a 4.2 percent drop in traffic, offset by a 2.0 percent increase in basket size.

Prescription sales fell 7.2 percent and comparable prescriptions slipped 11.3 percent.

Walgreens today also announced that it is reporting results from its investment in Alliance Boots on a one-quarter lag rather than a one-month lag period, as previously disclosed. The move is to better align audit requirements for the investment and more efficiently address regulatory and audit considerations...The company previously estimated its accretion related to the Alliance Boots investment for fiscal year 2013 would be 23 to 27 cents per diluted share. As a result of a one-quarter rather than a one-month reporting lag period, the company estimates that the accretion over the last three quarters of fiscal 2013 will be an adjusted 25 to 29 cents per diluted share, and an adjusted 18 to 22 cents for the full fiscal year. These estimates do not include amortization expense or one-time transaction costs, and reflect the company’s current estimates of IFRS to GAAP conversion and foreign exchange rates."

"During a quarter that included a number of non-operational items, as well as the ongoing Express Scripts (Nasdaq: ESRX) impact, we saw the underlying performance of our business strengthen with improved gross profit margins and an upswing in comparable prescriptions filled in the quarter," commented CEO Doug Wilson.




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