Walgreen Disappoints, Misses Forecast - TheStreet

Walgreen Disappoints, Misses Forecast

Walgreen reports a surprise drop in third-quarter earnings.
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posted a surprise drop in third-quarter profit, hurt by charges related to the purchase of Duane Reade and health-care reform expenses.

During the quarter, the drugstore earned $463 million, or 47 cents a share, compared with $522 million, or 53 cents, in the year-ago period. Analysts were calling for a profit of 57 cents a share for Walgreen.

The quarter included charges of 4 cents a share for Walgreen from the elimination of a tax benefit related to Medicare, 2 cents for the Duane Reade acquisition and 1 cent for restructuring.

Walgreen sales jumped 6% to $17.2 billion, while same-store sales inched up 0.7%. Same-store sales were hurt by softness is descretionary purchases and a milder cold and flu season, the company said.

Last week Walgreen settled a dispute with rival

CVS Caremark

(CVS) - Get Report

involving its pharmacy benefits management business. Under the new agreement, Walgreen will continue to participate in CVS' Caremark business for existing, new and renewed plans. The financial terms of the deal were not disclosed.

Walgreen had previously said that that it was ending its deal with CVS's PBM unit, citing disagreements over CVS's business practices and drug pricing. Two days after this announcement, CVS said that it was ending its partnership with Walgreen by the end of June.

Shares of Walgreen are falling 3.8% to $29 in pre-market trading.

-- Reported by Jeanine Poggi in New York.

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