Walgreen Company Earnings Call Insights: FIFO Gross Margin and Investments

| + More Articles
  • Like on Facebook
  • Share on Google+
  • Share on LinkedIn

Walgreen Company (NYSE:WAG) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.

FIFO Gross Margin

Edward Kelly – Credit Suisse: Could we start with the gross margin? I am a little confused on the FIFO gross margin down 20 basis points, pharmacy up, front-end down slightly, but I guess I don’t really understand how the front-end margin maybe is not down more or pharmacy not down given the total Company down 20 basis points? Because front-end just not – is only 35% of sales or so, right, and its only down slightly. If you could maybe just help us reconcile exactly what’s going on there?

Gregory D. Wasson – President and CEO: Yes. I will start and maybe Rick or Wade can give some actual dollars. But as far as, as we said directionally pharmacy was up obviously with the help of the generics that we had for this past quarter, offset obviously by ongoing reimbursement pressure but also with our 90-day drive that we have. One of the focuses we have is to continue to give customers what they are looking for and as for chronic medications and 90-day (colonies of) retail. So that’s an impact that’s working the other direction certainly in pharmacy but we think it’s the right thing to do long term. So is the front-end, as we have said, we think we are making good intelligent investments in price and promotion. I feel like we are getting steady momentum back into the front-end of the business and we are continuing to make sure that we do that going forward. But as we have said we were going to – we always plan to make some investment in the front-end, that’s exactly what we are doing.

Edward Kelly – Credit Suisse: Are you happy with the comparable gross profit dollar growth in the front-end, how does that look and how has that changed as you started investing into promotions?

Wade D. Miquelon – CFO: Yes. I think we had solid gross profit dollar increase and then when you compare to the SG&A dollar growth and we have said all along there, goal is to have 100 basis point spread between the two, over the long haul and I think with the performance that we have turned in this quarter we are pleased with the way both of those worked in unison…

More Articles About:

To contact the reporter on this story: staff.writers@wallstcheatsheet.com To contact the editor responsible for this story: editors@wallstcheatsheet.com

Yahoo Finance, Harvard Business Review, Market Watch, The Wall St. Journal, Financial Times, CNN Money, Fox Business