Walgreen 3Q profit jumps but misses expectations

Published on NewsOK Modified: June 24, 2014 at 11:10 am •  Published: June 24, 2014
Advertisement
;

Walgreen's fiscal third quarter earnings jumped 16 percent compared with last year, aided in part by a lower income tax rate, but the drugstore chain's performance again fell short of Wall Street's expectations.

The Deerfield, Illinois, company also left investors and analysts hanging after announcing quarterly results Tuesday. Walgreen executives said they are considering their option to complete a takeover of Swiss health and beauty retailer Alliance Boots — a move that could involve an overseas reincorporation — but they won't be ready to discuss their next step until late July or early August.

For the fiscal third quarter, Walgreen said an increase in foreign income helped knock its tax rate down to 31.5 percent, compared with 38.7 percent last year. As a result, the company's income tax provision dropped $43 million in the quarter.

The lower-than-expected tax rate contributed a benefit of at least 8 cents per share toward the company's bottom line, Cantor Fitzgerald analyst Ajay Jain said in a research note that described Walgreen's overall earnings as weak.

Walgreen Co. earned $722 million, or 75 cents per share, in the quarter that ended May 31. That's up from $624 million, or 65 cents per share, a year ago.

Adjusted earnings excluding one-time items totaled 91 cents per share, which was two cents below average analyst expectations. The drugstore chain also fell short in its fiscal second quarter.

Walgreen's revenue climbed 6 percent to $19.4 billion. Analysts expected $19.44 billion in revenue, according to FactSet.

Walgreen is feeling pressure from both drugmakers who are raising prices and payers like health insurers that are reducing what they will pay for prescriptions, said Vishnu Lekraj, who covers the company for Morningstar.



Trending Now


AROUND THE WEB

  1. 1
    Sex Valley: Tech's booming prostitution trade
  2. 2
    Colorado Is Consuming Way More Pot Than Anyone Ever Believed
  3. 3
    What Dan Gilbert said to LeBron James to get him to return to Cleveland
  4. 4
    Female Yahoo Exec Sued By a Female Employee for Sexual Harassment
  5. 5
    A company wants you to experiment on Facebook — by quitting
+ show more