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Walgreens’ third quarter sales rise
June 24th, 2014
DEERFIELD, Ill. – Walgreen Co. said Tuesday that its third-quarter sales increased 5.9% over the previous year’s quarter to $19.4 billion as total sales in comparable stores increased 4.8%.
Sales for the first nine months increased 5.6% to $57.3 billion. Front-end comparable-store sales (those open at least a year) increased 2.2% in the third quarter, customer traffic in comparable stores decreased 0.7%, and basket size increased 2.9%.
Walgreens’ Balance Rewards loyalty program reached 81 million active members at the end of this year’s third quarter.
Prescription sales, which accounted for 64.4% of sales in the quarter, increased 8.4% while prescription sales in comparable stores increased 6.3%. The company filled 218 million prescriptions in the quarter, an increase of 4.5% over last year’s third quarter. Prescriptions filled in comparable stores increased 4.1%.
Walgreens also saw strong growth in prescriptions filled for Medicare Part D patients, which increased 11.6% in the third quarter compared with last year’s quarter, while the company’s Part D market share increased 60 basis points in May compared with the same month a year ago.
"We continued to see improving top-line growth in the third quarter driven by increased daily living sales and strong increases in both prescriptions filled and our pharmacy market share," said Walgreens president and chief executive officer Greg Wasson. "At the same time, we are experiencing increased pressure on pharmacy gross profit margins. We maintained solid expense control in the third quarter to offset some of this pressure while understanding that there is more to be done. We will be accelerating our optimization efforts, including taking additional steps to lower expenses companywide. In addition, our joint venture with Alliance Boots continues to generate significant benefits."
The combined synergies for Walgreens and its strategic partner, Alliance Boots, in the first nine months of fiscal 2014 were approximately $367 million. The joint synergy program is now estimated to deliver second-year combined synergies of $400 million to $450 million, an increase from the previous second-year estimate of $375 million to $425 million.
Alliance Boots contributed 15 cents per diluted share to Walgreens’ third quarter 2014 adjusted results. The company estimates that the accretion from Alliance Boots in the fourth quarter of fiscal 2014 will be an adjusted 6 cents to 7 cents per diluted share. This estimate does not include amortization expense, the impact of AmerisourceBergen warrants or onetime transaction costs, and it reflects the company’s current estimates of IFRS to GAAP conversion and foreign exchange rates.