Walgreen Profit Up 5.2%

The drug store chain, which operates 5,056 in 45 states and Puerto Rico, beat analysts' earning estimates of 33 cents per share but said earnings could have been higher if it were not for stock option expenses that reduced pre-tax earnings by $36.2 million, or 2 cents per share.

Revenue at the drugstore chain was up by 10%, rising from $9.9 billion a year earlier to $10.9 billion for the three-month period ending Nov. 30. Total sales at stores open at least a year were up 7.2% in the quarter, while comparable pharmacy sales were up 7.7% and front-end comparable store sales rose 6.4% during the quarter. Total pharmacy sales climbed 10.3% overall. The number of prescription sales also rose 5% during the three-month period.Prescription revenue, which accounted for about 65% of the company's sales, increased 10% with generic drug sales helping to widen the firm's profit-margin by about 27.5%, company officials said.

The company said it also expects to benefit from the acquisition of Schraft's A Specialty Pharmacy, which is a specialist in the fertility drug business, and its joint venture with SeniorMed, an assisted living prescription business.

Selling, occupancy and administrative expenses took its toll on the numbers, however, increasing the firm's expenses during the period to 22.57% of sales, due in large part to the expensing of employee stock options, higher store salaries and the effect of last year's gain from litigation settlements, the company said.

Walgreens, which opened or acquired 127 new stores in the first quarter, said it plans to open 475 stores in fiscal 2006 and reaffirmed its goal of operating more than 7,000 stores by 2010.