Walgreens Earnings: Misses Estimates as Profit Dips

S&P 500 (NYSE:SPY) component Walgreens (NYSE:WAG) reported its results for the fourth quarter. Walgreen operates a chain of retail drug stores.

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Walgreens Earnings Cheat Sheet

Results: Net income for Walgreens fell to $353 million (39 cents per share) vs. $792 million (87 cents per share) a year earlier. This is a decline of 55.4% from the year-earlier quarter.

Revenue: Fell 5% to $17.07 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Walgreens fell short of the mean analyst estimate of 57 cents per share. Analysts were expecting revenue of $17.41 billion.

Quoting Management: “This was a challenging, but very important year for Walgreens, and we finished with a tough quarter. While we controlled costs and generated strong cash flow in the fourth quarter, our performance also reflected a strategic shift in promotional spending, a continued economically challenged consumer, and the impact from Express Scripts,” said Walgreens President and CEO Greg Wasson. “Entering the new fiscal year, we believe we are positioned for growth as we benefit from the launch of our Balance Rewards loyalty program, our reentry into the Express Scripts pharmacy provider network and our execution of the Alliance Boots strategic partnership.”

Key Stats:

The company has now seen net income fall for four quarters in a row. In the third quarter, net income fell 10.9% while the figure fell 7.6% in the second quarter and 4.5% in the first quarter.

The company fell short of estimates last quarter after being in line with expectations the quarter before with net income of 62 cents.

Revenue has declined for two quarters in a row. In the third quarter, revenue declined 3.4% to $17.75 billion from the year-earlier quarter.

Cost of sales dropped to $12.24 billion, down 5.1% from the year-earlier quarter. Last quarter, cost of sales was 71.7% of revenue versus 71.8% a year earlier.

Looking Forward: The average estimate for the first quarter of the next fiscal year remains unchanged at 66 cents a share. The average estimate for the fiscal year is now $2.61 per share, down from $2.63 sixty days ago.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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