Walgreen Q3 Profit Rises; But Results Miss Estimates - Quick Facts

(RTTNews) - Walgreen Co. (WAG) reported that its net earnings for the fiscal 2014 third quarter were $722 million, a 15.7 percent increase from $624 million in the same quarter a year ago. Net earnings per share for the quarter increased 15.4 percent to $0.75, compared with $0.65 per share in the year-ago quarter.

This year's third quarter earnings benefited from a lower GAAP effective income tax rate. The lower rate of 31.5 percent compared with 38.7 percent last year resulted from increased foreign income taxed at a lower rate, favorable audit settlements, certain nondeductible expenses last year and other discrete events.

Adjusted fiscal 2014 third quarter net earnings were $883 million, an 8.7 percent increase from $812 million in the same quarter a year ago. Adjusted net earnings per share for the quarter grew 7.1 percent to $0.91, compared with $0.85 per share in the year-ago quarter. Analysts polled by Thomson Reuters expected the company to report earnings of $0.94 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter increased to $19.40 billion from $18.31 billion in the year ago quarter. Wall Street expected revenues of $19.48 billion.

Front-end comparable store sales increased 2.2 percent in the third quarter, customer traffic in comparable stores decreased 0.7 percent and basket size increased 2.9 percent, while total sales in comparable stores increased 4.8 percent.

The company estimates that the accretion from Alliance Boots in the fourth quarter of fiscal 2014 will be an adjusted 6 to 7 cents per share.

Walgreens board is moving forward toward consideration of the second step in the Walgreens-Alliance Boots strategic transaction, including determination of timing and structure, combined management teams, cost reduction initiatives and potential changes in the company's future capital structure.

As a result of the many step two considerations and current business performance, the company is withdrawing its fiscal year 2016 goals that were previously announced in 2012.