Walgreen 4Q Profit Hurt by Katrina
Chicago, Walgreen Co. reported a slim rise in its fourth-quarter profit and said sales were slowed by Hurricane Katrina and consumers’ increasing preference for generic prescription drugs over more costly name-brand ones.
Quarterly profit rose to $329 million, or 32? a share, for the fourth quarter, ended Aug. 31, from $324.4 million, or 32? a share, a year earlier. The increase in earnings was the smallest since the 1999 fourth quarter. Sales were $10.49 billion, up 11.3% from $9.43 billion a year ago, but $100 million less than analysts predicted.
Results included a $54.7 million pretax charge for expenses related to Hurricane Katrina damage, which cut quarterly earnings by 3? per share. The hurricane forced Walgreen to shut down approximately 74 stores in the Gulf region. Currently, 32 stores remain closed in New Orleans and the surrounding area.
The chain said it remains on plan to open 475 new stores in fiscal 2006—for a record net increase of 390—after 435 new-store openings in 2005.
“We’re in excellent shape to continue our expansion plans while investing in new store technology and customer-service initiatives,” chairman and CEO David Bernauer said. The retailer projected $1.4 billion in capital investments for fiscal 2006.