New York: Walgreen’s fiscal first-quarter earnings sank nearly 26 percent as costs tied to a couple big deals and Superstorm Sandy helped put a bigger-than-expected dent in the drugstore chain’s performance.
CEO Greg Wasson told analysts he saw the quarter as a “turning point” for the Deerfield, Illinois, company, which has been working to recapture customers it lost during a contract dispute with Express Scripts Holding Co. But investors didn’t buy that message at least initially, as the stock fell deeper than broader market declines in Friday trading.
Walgreen Co spent $4bn in cash earlier this year to buy a stake in Alliance Boots, a Swiss company that runs the largest drugstore chain in the United Kingdom. It also spent $438m on a drugstore chain focused on the mid-South under the USA Drug, Super D Drug and Med-X names.
Costs tied to those deals totalled $23m in the quarter, and Walgreen said it only counted a small portion of the gains it received from Alliance Boots. It is reporting those gains a quarter after they occur to address audit and regulatory requirements.
The storm system that swept up the East Coast in late October also cost $24m in the quarter, as it forced Walgreen to temporarily close hundreds of stores. Overall, Walgreen earned $413m, or 43 cents per share, in the three months that ended November 30.
AP
