Walgreen Says Sales Reach Record as Prescription Drugs Expand

Sept. 30 (Bloomberg) — Walgreen Co., the largest U.S. drugstore chain by revenue, said its fiscal year sales grew to a record $76.4 billion after the company’s prescription drug business grew, especially from the U.S. government.

Excluding one-time items, fourth-quarter earnings were 74 cents a share, matching the average of 22 analysts’ estimates compiled by Bloomberg. Walgreen reported a net loss of $239 million, or 25 cents a share, compared to net income of $657 million, or 69 cents a share, a year earlier, it said in a statement.

Investors have been disappointed by pharmacy companies this year, including Walgreen’s competitor Rite Aid Corp., as profits have been hurt by lower reimbursement rates for drugs and rising prices of generic medicines.

Walgreen is in the middle of its biggest deal ever, the purchase of European health beauty chain Alliance Boots GmbH. As Walgreen completes its merger with the Bern, Switzerland-based company, about half of the top executive roles are being filled by Alliance Boot managers. Alliance Boots’ Chairman Stefano Pessina has become Walgreen’s biggest shareholder, with a board seat and a hand in strategy and deal-making.

Walgreen owns 45 percent of Alliance Boots and said last month it plans to buy all of the company and base the combined business in Chicago. The European retailer controls about 40 percent of the high-margin market for beauty products in the U.K.

Fourth quarter sales grew 6.2 percent to $19.1 billion, while same-store sales grew 5.4 percent. For the full fiscal year, sales grew 5.8 percent. The company credited its pharmacy operations for the rise, particularly business from Medicare, the U.S. insurance program for the elderly and disabled.

–With assistance from Cynthia Koons in New York.

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