Attached files
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| 8-K - WALGREEN CO. 8-K - WALGREEN CO | a6124807.htm |
Exhibit
99.1
|
News
From
|
 |
Walgreen
Co. Corporate Communications l 200 Wilmot Road l Deerfield, Ill.
60015 l (847)
914-2500
| Media Contact: | Tiffani Washington, 847-914-2925 |
| Investor Contacts: | Rick Hans, CFA, 847-914-2385 |
| Lisa Meers, CFA, 847-914-2361 |
| FOR IMMEDIATE RELEASE | http://news.walgreens.com |
Walgreen
Co. Reports Record First Quarter 2010 Earnings Per Diluted Share of 49 Cents,
Increasing
19.5 Percent; Results Include 3 Cents Per Diluted Share of Restructuring
Costs
|
·
|
First
quarter sales up 9.5 percent to record $16.4
billion
|
|
·
|
Cash
flow from operations for the quarter more than triples to $1.2
billion
|
|
·
|
More
than 17,000 Walgreens and Take Care Clinic immunizers administer 5.4
million flu shots, up from 1.2 million last
year
|
DEERFIELD,
Ill., Dec. 21, 2009 – Walgreens (NYSE, NASDAQ: WAG) today announced record
earnings and sales for the first quarter of fiscal year 2010.
Net
earnings for the quarter ended Nov. 30 were $489 million, a 19.6 percent
increase from $408 million in the same quarter a year ago. Earnings per share
were 49 cents per diluted share, a 19.5 percent increase from 41 cents per
diluted share a year ago. First quarter 2010 results include the
impact of 3 cents per diluted share in restructuring and related costs
associated with the company’s Rewiring for Growth initiative.
Cash flow from operations for the
quarter more than tripled over last year’s quarter to $1.2 billion, driven by
improved working capital and drugstore performance.
“We’re extremely pleased to report
solid, double-digit earnings growth,” said Walgreens President and CEO Greg
Wasson. “We remain confident we can continue to generate strong cash flow, which
provides us the financial strength and flexibility to continue investments in
our core strategies while returning cash to shareholders.”
First quarter sales increased 9.5
percent from the prior-year quarter to $16.4 billion. Total sales in comparable
stores (those open at least a year) increased 4.9 percent in the quarter, while
front-end comparable store sales increased 2.7 percent.
(more)
-2-
Prescription sales, which accounted for
66.2 percent of sales in the quarter, climbed 10.0 percent, while prescription
sales in comparable stores increased 6.1 percent. The company’s number of
prescriptions filled increased 12.0 percent over last year’s first quarter,
including a benefit of 0.7 percentage points due to more patients filling 90-day
prescriptions. The company exceeded by 5.5 percentage points the industry-wide
prescription growth rate, excluding Walgreens, during the same period as
reported by IMS Health.
An early flu season and a well-executed
flu shot campaign that launched Sept. 1, a month earlier than last year, lifted
front-end and pharmacy sales in September, October and, to a lesser extent,
November.
“Consumer concerns over high
unemployment and the challenging economy were a drag on holiday sales at the end
of November, and we’ve seen a similar pattern through mid-December,” said
Wasson. “Like every Christmas season, our performance is driven by the final
days, which makes this an important week. The calendar works in our favor this
year, with Christmas falling on a Friday. That means the convenience of our more
than 7,100 stores makes us an ideal destination for last-minute shopping
needs.”
Selling, general and administrative
expense dollars in the first quarter grew 7.4 percent over the year-ago period.
SG&A restructuring costs related to Rewiring for Growth were $14 million
both in this quarter and the year-ago quarter. Total Rewiring for Growth
restructuring and related costs this quarter, including SKU discontinuation,
were $42 million.
Total expense growth was partially
offset by savings from Rewiring for Growth, primarily in store payroll expenses.
Rewiring for Growth remains on track to deliver $1 billion in pre-tax cost
savings beginning in fiscal 2011.
Gross profit margins decreased 0.1
percentage points versus the year-ago quarter to 27.7 as a percent to
sales. Negatively impacting margins were front-end product mix,
non-retail businesses and Customer Centric Retailing (CCR) markdowns.
Helping overall margins were an increase in pharmacy margins due to the impact
of generic drug sales and flu shots, and a LIFO provision of $34 million this
year versus $43 million last year.
Other
first quarter highlights
During the quarter, Walgreens continued
to focus on its three core strategies – to leverage the best store network in
America, enhance the customer experience and drive cost reductions and
productivity gains.
(more)
-3-
In September, the company launched its
largest flu shot campaign in history, administering more than 5 million shots by
the end of November compared with 1.2 million in the entire previous flu season.
The program attracted many new patients to Walgreens pharmacies, as two-thirds
of flu shot recipients hadn’t filled a prescription at Walgreens in the last six
months.
“Our seasonal flu shot program was one
of the best-executed initiatives in my 30 years at Walgreens,” said Wasson. “We
see big opportunities to deliver preventive services including
pharmacist-delivered immunizations and vaccinations as we continue to expand our
capabilities in this area. It’s a great illustration of the accessibility of our
pharmacists on the front lines of health care.”
The company opened or acquired 172 new
drugstores (a net gain of 150 after relocations and closings) in the quarter
compared with 212 (or a net gain of 187) in the year ago quarter. Walgreens
expects organic store growth of between 4.5 and 5 percent in fiscal 2010 and
between 2.5 and 3 percent annually beginning in 2011.
In October, Walgreens announced the
acquisition of certain assets from 12 Eaton Apothecary pharmacies in the Boston
area. The transaction, expected to close in January, is an example of the
company’s market share growth opportunities through targeted
acquisitions.
Walgreens completed the rollout of its
CCR format in 400 stores in Texas during the quarter. Customer response to the
initiative, designed to improve the overall shopping experience and increase
both the number of customer visits and basket size, has been
positive.
The company is adding its new beer and
wine selection to most stores and now has nearly 1,600 stores with the products.
Expanding this category to most stores is another step toward making Walgreens a
destination retailer.
Walgreens also launched its new brand
campaign, “Walgreens. There’s A Way” in September, followed by the re-launch of
Walgreens.com with a variety of new healthy living and product resources, and
simplified shopping tools and services.
As part of its $2 billion stock
repurchase program announced in October, Walgreens bought back $150 million in
company stock during the quarter.
The
road ahead
“We approach the coming year confident
in our strategies and cautious about the economy,” said Wasson. “Despite ongoing
economic challenges, our strong balance sheet and unparalleled network of
locations and services position us for continued growth. We’ll continue to
execute our strategies in order to drive sales, accelerate earnings and deliver
strong cash flow.”
(more)
-4-
At Nov. 30, Walgreens operated 7,649
locations in all 50 states, the District of Columbia, Puerto Rico and Guam. That
includes 7,147 drugstores, as well as worksite health centers, home care
facilities and specialty, institutional and mail service pharmacies. Its Take
Care Health Systems subsidiary manages more than 700 in-store convenient care
clinics and worksite health and wellness centers.
Walgreens will hold a one-hour
conference call to discuss the first quarter results beginning at 8:30 a.m.
Eastern time today, Dec. 21. The conference call will be simulcast through
Walgreens investor relations Web site at: http://investor.walgreens.com. A replay
of the conference call will be archived on the Web site for 12 months after the
call. A podcast also will be available on the investor relations Web
site.
The replay also will be available from
11:30 a.m. Eastern time, Dec. 21 through Dec. 28 by calling 888-203-1112 within
the U.S. and Canada, or 719-457-0820 outside the U.S. and Canada, using replay
code 2499110.
This
news release may contain forward-looking statements that involve risks and
uncertainties. The following factors could cause results to differ materially
from management expectations as projected in such forward-looking statements:
seasonal variations, competition, risks of new business areas, the availability
and cost of real estate and construction, and changes in federal or state
legislation or regulations. Investors are referred to the “Cautionary Note
Regarding Forward-Looking Statements” in the Company’s most recent Form 10-K,
which Note is incorporated into this news release by reference.
(more)
-5-
|
WALGREEN CO. AND
SUBSIDIARIES
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||||||||
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CONSOLIDATED
CONDENSED STATEMENTS OF EARNINGS
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||||||||
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(UNAUDITED)
|
||||||||
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(In
Millions, Except Per Share Amounts)
|
||||||||
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Three
Months Ended
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||||||||
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November
30,
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November
30,
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|||||||
|
2009
|
2008
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|||||||
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Net
sales
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$ | 16,364 | $ | 14,947 | ||||
|
Cost
of Sales (1)
|
11,826 | 10,796 | ||||||
|
Gross
Profit
|
4,538 | 4,151 | ||||||
|
Selling,
general and administrative expenses
|
3,741 | 3,482 | ||||||
|
Operating
Income
|
797 | 669 | ||||||
|
Interest
expense, net
|
21 | 15 | ||||||
|
Earnings
Before Income Tax Provision
|
776 | 654 | ||||||
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Income
tax provision
|
287 | 246 | ||||||
|
Net
Earnings
|
$ | 489 | $ | 408 | ||||
|
Net
earnings per common share:
|
||||||||
|
Basic
|
$ | .49 | $ | .41 | ||||
|
Diluted
|
$ | .49 | $ | .41 | ||||
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Dividends
declared
|
$ | .1375 | $ | .1125 | ||||
|
Average
shares outstanding
|
988.4 | 988.6 | ||||||
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Dilutive
effect of stock options
|
5.0 | 1.6 | ||||||
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Average
Shares Outstanding Assuming Dilution
|
993.4 | 990.2 | ||||||
|
Percent
of Sales
|
||||||||
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Net
sales
|
100.0 | % | 100.0 | % | ||||
|
Cost
of Sales
|
72.3 | 72.2 | ||||||
|
Gross
Margin
|
27.7 | 27.8 | ||||||
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Selling,
general and administrative expenses
|
22.8 | 23.3 | ||||||
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Interest
expense, net
|
0.2 | 0.1 | ||||||
|
Earnings
Before Income Tax Provision
|
4.7 | 4.4 | ||||||
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Income
tax provision
|
1.7 | 1.7 | ||||||
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Net
Earnings
|
3.0 | % | 2.7 | % | ||||
|
(1)
Fiscal 2010 first quarter includes a LIFO provision of $34 million versus
$43 million in the previous year.
|
||||||||
(more)
-6-
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WALGREEN
CO. AND SUBSIDIARIES
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||||||||
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CONSOLIDATED
CONDENSED BALANCE SHEETS
|
||||||||
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(UNAUDITED
AND SUBJECT TO RECLASSIFICATION)
|
||||||||
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(In
Millions)
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||||||||
|
November
30,
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November
30,
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|||||||
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2009
|
2008
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|||||||
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Assets
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||||||||
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Current
Assets:
|
||||||||
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Cash
and cash equivalents
|
$ | 2,552 | $ | 886 | ||||
|
Short-term
investments
|
600 | - | ||||||
|
Accounts
receivable, net
|
2,577 | 2,776 | ||||||
|
Inventories
|
7,474 | 8,298 | ||||||
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Other
current assets
|
170 | 199 | ||||||
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Total
Current Assets
|
13,373 | 12,159 | ||||||
|
Non-Current
Assets:
|
||||||||
|
Property
and Equipment, at cost, less
accumulated
depreciation and amortization
|
10,865 | 10,150 | ||||||
|
Goodwill
|
1,467 | 1,433 | ||||||
|
Other
non-current assets
|
843 | 771 | ||||||
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Total
Non-Current Assets
|
13,175 | 12,354 | ||||||
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Total
Assets
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$ | 26,548 | $ | 24,513 | ||||
|
Liabilities
and Shareholders' Equity
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||||||||
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Current
Liabilities:
|
||||||||
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Short-term
borrowings
|
$ | 13 | $ | 1,080 | ||||
|
Trade
accounts payable
|
5,043 | 5,026 | ||||||
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Accrued
expenses and other liabilities
|
2,446 | 2,246 | ||||||
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Income
taxes
|
320 | 144 | ||||||
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Total
Current Liabilities
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7,822 | 8,496 | ||||||
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Non-Current
Liabilities:
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||||||||
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Long-term
debt
|
2,366 | 1,337 | ||||||
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Deferred
income taxes
|
275 | 154 | ||||||
|
Other
non-current liabilities
|
1,464 | 1,395 | ||||||
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Total
Non-Current Liabilities
|
4,105 | 2,886 | ||||||
|
Shareholders'
Equity
|
14,621 | 13,131 | ||||||
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Total
Liabilities and Shareholders' Equity
|
$ | 26,548 | $ | 24,513 | ||||
(more)
-7-
|
WALGREEN
CO. AND SUBSIDIARIES
|
||||||||
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CONSOLIDATED
CONDENSED STATEMENTS OF CASH FLOWS
|
||||||||
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(UNAUDITED
AND SUBJECT TO RECLASSIFICATION)
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||||||||
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(In
Millions)
|
||||||||
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Three
Months Ended November 30,
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||||||||
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2009
|
2008
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|||||||
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Cash
flows from operating activities:
|
||||||||
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Net
earnings
|
$ | 489 | $ | 408 | ||||
|
Adjustments
to reconcile net earnings to net cash provided by
operating
activities -
|
||||||||
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Depreciation
and amortization
|
257 | 236 | ||||||
|
Deferred
income taxes
|
(4 | ) | 16 | |||||
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Stock
compensation expense
|
24 | 32 | ||||||
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Income
tax savings from employee stock plans
|
3 | - | ||||||
|
Other
|
5 | 4 | ||||||
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Changes
in operating assets and liabilities -
|
||||||||
|
Accounts
receivable, net
|
(54 | ) | (313 | ) | ||||
|
Inventories
|
(682 | ) | (1,036 | ) | ||||
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Other
assets
|
3 | 15 | ||||||
|
Trade
accounts payable
|
735 | 736 | ||||||
|
Accrued
expenses and other liabilities
|
65 | 21 | ||||||
|
Income
taxes
|
259 | 210 | ||||||
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Other
non-current liabilities
|
68 | (17 | ) | |||||
|
Net
cash provided by operating activities
|
1,168 | 312 | ||||||
|
Cash
flows from investing activities:
|
||||||||
|
Purchases
of short-term investments – held to maturity
|
(600 | ) | - | |||||
|
Proceeds
from short-term investments – held to maturity
|
500 | - | ||||||
|
Additions
to property and equipment
|
(304 | ) | (638 | ) | ||||
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Proceeds
from sale of assets
|
5 | 15 | ||||||
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Business
and intangible asset acquisitions, net of cash received
|
(32 | ) | (61 | ) | ||||
|
Net
cash used for investing activities
|
(431 | ) | (684 | ) | ||||
|
Cash
flows from financing activities:
|
||||||||
|
Net
proceeds from short-term borrowings
|
- | 998 | ||||||
|
Stock
purchases
|
(195 | ) | (99 | ) | ||||
|
Proceeds
related to employee stock plans
|
63 | 32 | ||||||
|
Cash
dividends paid
|
(136 | ) | (111 | ) | ||||
|
Other
|
(4 | ) | (5 | ) | ||||
|
Net
cash (used for) provided by financing activities
|
(272 | ) | 815 | |||||
|
Changes
in cash and cash equivalents:
|
||||||||
|
Net
increase in cash and cash equivalents
|
465 | 443 | ||||||
|
Cash
and cash equivalents at beginning of year
|
2,087 | 443 | ||||||
|
Cash
and cash equivalents at November 30
|
$ | 2,552 | $ | 886 | ||||
#####