CVS Joins Walgreen in Disappointing Investors

The drugstore chain says second-quarter and full-year earnings will fall short of expectations.
By Tim Arango ,

It hasn't been a good week for investors in the nation's top drugstore operators.

CVS

(CVS) - Get Report

warned Wednesday morning that both its second-quarter and full-year earnings will fall short of Wall Street's expectations, and shares plunged in early trading, down lately $5.80, or 13%, to $38.30. The announcement came two days after shares in

Walgreen

(WAG)

, the nation's largest drugstore chain, tumbled after the company

missed its quarterly earnings target.

CVS said it expects to earn 48 cents a share in the second quarter, 2 cents above its earnings from last year's second quarter but lower than the consensus estimate of 52 cents a share compiled by

Thomson Financial/First Call

. For the year, the company expects earnings per share of $1.92 to $1.96, 7% to 9% above last year's earnings, but lower than the $2.08 a share that analysts had expected. The company is scheduled to release second-quarter earnings on July 31.

Like Walgreen, Woonsocket, R.I.-based CVS blamed slowing sales in front-end products, which include all items except drugs, as a key reason for the shortfall. However, CVS also said it was seeing slower growth in its pharmacies. (In an earlier story,

TheStreet.com

looked at the

mix of front-end and pharmacy items at drugstore chains, and wondered whether such companies are any different from mass-merchandise retailers.)

"Clearly, we are disappointed with these developments, and we are taking the necessary actions to reaccelerate our growth," Tom Ryan, the company's president and chief executive officer, said in a statement.

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