Walgreen earnings rise 2%

Drugstore chain Walgreen Co. said Monday that its fiscal third-quarter profit rose 2% as it focused on cost control and maintained a rapid expansion pace in a difficult retail environment.

Despite the modest gain, the results were slightly short of Wall Street expectations and Walgreen shares fell back after initially climbing nearly 3%.

Overall, however, analysts said the Deerfield, Ill.-based company’s cost discipline and continued advances in a weak economy showed it had turned a corner after recent sluggishness.

“Though Walgreen faces near-term head winds such as a tougher consumer environment and an industrywide slowdown in the number of prescriptions dispensed, we believe efforts to trim expense growth and build market share will enable it to regain its form as a double-digit earnings grower in the near future,” Morningstar analyst Mitchell Corwin said in a research note.

Walgreen shares fell 37 cents to $34.70 on Monday.

Earnings for the three months ended May 31 were $572.3 million, or 58 cents a share, up from $561.2 million, or 56 cents, a year earlier. That was a penny shy of the consensus estimate of analysts surveyed by Thomson Financial.

Revenue rose 10% to $15 billion.

Sales in stores open at least one year, a key retail metric known as same-store sales, rose 3.4%.

Walgreen is jockeying with CVS Caremark Corp. for top spot among drugstore chains.

The company opened 138 drugstores in the quarter for a total of 6,252 drugstores in 49 states, the District of Columbia and Puerto Rico -- 554 more than a year ago.