Walgreen Co.'s fiscal fourth-quarter earnings soared 86 percent, as the nation's largest drugstore chain booked a big inventory-related gain and benefited from its acquisition of a stake in European health and beauty retailer Alliance Boots.
The Deerfield, Ill., company said Tuesday that it filled more prescriptions in this year's quarter and saw some improvement from the store area outside the pharmacy.
It also reaped a greater benefit than it expected from its combination with European health and beauty retailer Alliance Boots. Walgreen bought a 45 percent stake in that company last year and has an option to buy the rest of the business in 2015.
Alliance Boots runs the largest drugstore chain in the United Kingdom.
Overall, Walgreen earned $657 million, or 69 cents per share, in the quarter that ended Aug. 31. That compares with earnings of $353 million, or 39 cents per share, a year ago. Revenue climbed 5 percent to $17.94 billion.
Adjusted earnings totaled 73 cents per share, excluding acquisition-related costs among other items.
Analysts forecast earnings of 72 cents per share on $17.96 billion in revenue, according to FactSet.
Walgreen shares added $2.44, or 4.5 percent, to close at $56.24.
The drugstore chain recorded an $8 million "last-in-first-out" inventory benefit in this year's quarter, compared with a $132 million charge last year. LIFO is a method of accounting for inventory that assumes a company sells its newest inventory first. The company takes a credit or charge each quarter according to the anticipated inflation rate for the year.
The company attributed the big swing to lower-than-anticipated prescription drug inventory ahead of a transition it made to drug distributor AmerisourceBergen Corp. Walgreen said earlier this year that it was buying an ownership stake in AmerisourceBergen and also entering into a supply agreement with the company for its drugstores, mail order and specialty pharmacy businesses.
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