Walgreen Posts 17% Gain in Profit

Walgreen Co., the largest U.S. drugstore chain, said Monday that fiscal second-quarter profit rose 17% after longer store hours helped increase pharmacy sales.

Net income in the period ended Feb. 29 climbed to $433.5 million, or 42 cents a share, from $370.9 million, or 36 cents, a year earlier, the Deerfield, Ill.-based company said. Sales in the quarter rose 16% to $9.78 billion.

Excluding $7.9 million gained from a litigation settlement, Walgreen earned 41 cents a share, 1 cent less than the average estimate of analysts surveyed by Thomson First Call.

Chief Executive David Bernauer spent more on payroll and high-traffic locations for new stores to gain business from rivals such as CVS Corp., which like Walgreen is opening more 24-hour locations. Prescription sales rose 19%, boosting net income to its biggest percentage gain in more than a year.

Shares of Walgreen fell 75 cents to $32.76 on the New York Stock Exchange. They’ve risen 7.4% the last year.

Walgreen has 247 more 24-hour stores than it did a year ago, raising its total to 1,250, and has more 24-hour pharmacies than all of its competitors combined, Rick Hans, Walgreen’s director of finance, said in a recorded message.

Walgreen, which opened 45 stores in the quarter, has 4,336 locations. It plans a net gain of 365 stores in fiscal 2004 and a total of 7,000 locations by 2010.

Sales at stores open at least a year rose 11.5%, including a 16% increase in pharmacy sales, which accounted for 60% of revenue. Walgreen’s sales of nonpharmacy items, which generate more profit than prescription drugs, rose 6.2% in stores open at least a year.