Walgreen drugstore chain profit up on higher traffic and sales

DEERFIELD, Ill. ― Walgreen Co., the largest U.S. drugstore chain, posted a higher quarterly profit on Tuesday, helped by rising sales of general merchandise and prescriptions.

The company also said there had been “no substantive progress” in its contract renewal talks with drug benefits manager Express Scripts Inc.

Walgreen said more people visited its stores and spent more per visit. The company is working on expanding its health and wellness services, such as clinics it operates in its stores and at work sites, as it tries to differentiate itself from archrival CVS Caremark Corp.

CVS operates a large pharmacy benefits management business, while Walgreen sold its own PBM unit in June.

Shares of Walgreen, which runs more than 7,7O0 drugstores, were up 2 percent at $36.75 in premarket trading.

The company said it had earned $792 million, or 87 cents per share, in the fourth quarter ended on August 31, compared with $470 million, or 49 cents per share, a year earlier.

Excluding the benefit from the PBM sale, the profit was 57 cents per share.

Meanwhile, Walgreen is publicly fighting with large PBM Express Scripts. The drugstore chain plans to stop filling prescriptions for people covered by Express Scripts at the end of the year after failing to agree on new contract terms, walking away from what could have been more than $5 billion in annual sales.

Sales in quarter rose 6.5 percent to $18.0 billion, slightly above the $17.92 billion Wall Street analysts were expecting, according to Thomson Reuters I/B/E/S.

Sales at stores open at least a year rose 4.4 percent, outpacing the gains of CVS and Rite Aid Corp. in their latest quarters.

Same-store prescriptions rose 3.4 percent at Walgreen, which claimed to have a 20 percent market share for fiscal 2011.

The number of visitors to drugstores open at least a year rose 1.6 percent, and customers spent 3 percent more per visit.