Walgreens Posts Record Q2

Net earnings for the quarter ending Feb. 28 rose 6.6% to $523.5 million, or 51 cents per diluted share, up from last year's $490.9 million, or 48 cents per diluted share. The results were impacted by a $27.4 million pre-tax employee stock option expense for the quarter along with last year's $4.7 million pre-tax gain from litigation settlements.

For the first half of the year, net earnings jumped 6.1% to $869.1 million, or 85 cents per diluted share compared to last year when net earnings were $819.5 million or 80 cents per diluted share. The company said a $63.6 million pre-tax employee stock option expense along with last year's $19.7 million gain in litigation settlements reduced the first quarter numbers.

Strong holiday and Valentine's Day seasons helped drive front-end sales during the quarter, leading to a gain in market share in 57 of Walgreen's top 60 core product categories, execs said. The results produced a record second quarter and first half for chain as sales increased 10.7% to $12.2 billion during the quarter and rose 10.5% in the first half to $23.1 billion. Total sales for stores open more than a year were also up 6.5% in the second quarter.

Despite a milder flu season this year, prescription sales climbed 11.1% during the quarter, accounting for 61.5% of the chain's total sales. Comparable stores filled 3.4% more prescriptions during the quarter with prescription sales rising 7.4% during the period. The Deerfield, IL-based chain's total prescription sales showed a 6.3% increase overall in prescription sales, compared to the average industry increase of 2.1%, excluding mail-order prescriptions.

The company, which operates 5,156 stores in 45 US states and Puerto Rico, said it is on track to open about 475 new stores this year and plans to open 7,000 new stores by 2010.