Walgreens issued their fourth quarter earnings statement which reflected a loss in profit by 59%.
Walgreens is the biggest drugstore outlet in the United States and is headquartered in Deerfield, Illinois. In their earnings statement they indicated that this significant loss in revenue could be directly attributed to competition from other drugstores.
Earnings were reported to be at $353 million or at a level of $.39 per share. In comparison to prior year this is a decline in value from $792 million in total or $.87 per share.
Additionally, caveats to this report include one time line item costs on the expense side of the ledger. One of those caveats was Walgreens’ acquisition of Alliance Boots. This company is a European-based drugstore operation. The negative impact of this acquisition was the loss of $.09 per share. Additional expenses that impacted the per-share value were the LIFO (last in first out) provision and amortization costs from acquisitions.
Factoring these nonrecurring expenses shows that Walgreens earned $.63 per share.
Adding to the decrease in value of stock was the profit statement which reflected a $17.1 billion loss in total sales or at a level of a 5% decrease. The total sales of Walgreens for this year were $71.1 billion. This is in comparison to previous year’s sales of $72.2 billion over the same time frame. Reflected in the sales report is a decline in nonprescription products by 8.7% and a decline in sales of prescriptions by 8.1%.
Contributing to the decline in value per share for the quarter and prescriptions sales was the ending of the prescription agreement between Walgreens and Express Scripts Holding Company. This loss in revenue reflected a decline in the quarter’s profit by an estimated 6% per share. This contract and associated customers made the shift to other prescription providers. Those providers include CVS Caremark Corporation (CVS) and Walmart stores.
In good news, Walgreens has renewed this agreement with Express Scripts. This renewal took place in July and will help to bolster profit for Walgreens in the future as the contract goes into effect on September 15.
The chief executive officer of Walgreens, Greg Wasson, conferred with analysts via a conference telecast and indicated that this renewal of the contract would return profitability to Walgreens. In that conference venue, the CEO declined to put a number to the returning customers, but has projected for the month of September an increase of $.63 per share of Walgreens stock. This is a seven cents increase over what was projected by various analysts.
Following an adjustment of $.15 per share of charges, the profit realized by Walgreens fell short of analysts projections. Consequently many analysts rate Walgreen as an underweight or the equivalent of a sell.
In recent trading, shares of Walgreens stock fell by .4% to a level of $36.44.
For the entire year Walgreens has seen an increase in value by 10%.
