June 25, 2013 / 11:51 AM / 6 years ago

Walgreen misses third-quarter target on lower traffic, weak economy

(Reuters) - Walgreen Co WAG.N posted a higher quarterly profit on Tuesday but missed analysts’ estimates, due to a still weak economy, lagging front-end sales and lower customer traffic.

The logo of Walgreens is seen at their Times Square store in New York December 17, 2012. REUTERS/Andrew Kelly

Walgreen, the biggest U.S. drugstore chain, said earnings rose to $624 million, or 65 cents per share, in the fiscal third quarter ended May 31, from $537 million, or 62 cents per share, a year earlier.

Excluding items, it earned 85 cents per share, compared with 72 cents in the year prior. Analysts, on average, expected 91 cents, according to Thomson Reuters I/B/E/S.

Quarterly sales rose to $18.3 billion, up from $17.7 billion in the third quarter of 2012, but fell short of the analysts’ average estimate of $18.43 billion.

Shares fell 5 percent to $45.64 in premarket trading.

Sales at stores open at least a year, or same-store sales, grew by 0.4 percent, while customer traffic in the stores decreased 3.9 percent. Total sales increased 1.4 percent.

Walgreen President and Chief Executive Greg Wasson said front-end sales were “still not up to expectations,” adding that the economy remained “challenging.”

Earlier this month, Walgreen agreed to pay $80 million in civil penalties to resolve allegations it violated federal rules governing the distribution of prescription painkillers. It set aside $25 million in the third quarter for the penalties, with earnings reduced by 4 cents to 6 cents per share.

Walgreen, with more than 8,000 U.S. drugstores, said it filled 209 million prescriptions in the quarter, an increase of 8.7 percent from last year.

Last year, the company bought a 45 percent stake in Alliance Boots ABN.UL, which runs Europe’s biggest pharmacy chain, in a $6.7 billion cash-and-stock deal. The company said the deal is expected to contribute 8 cents per diluted share to fourth-quarter adjusted results.

Reporting by Atossa Araxia Abrahamian; Editing by Jeffrey Benkoe

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