Walgreen Co. (WAG – Analyst Report) reported adjusted net earnings of 81 cents per share in the first quarter of fiscal 2015, up 12.5% from the year-ago adjusted number. The adjusted figure also beat the Zacks Consensus Estimate of 74 cents by 9.5%.
A year-over-year high-single-digit increase in the revenues primarily resulted in this bottom-line improvement.
Walgreen Co – Earnings Surprise | FindTheBest
In Aug 2012, Walgreens had entered into a strategic partnership with a global international pharmacy-led health and beauty group Alliance Boots GmbH, in which it acquired a 45% stake for $6.7 billion. This alliance fits Walgreens' strategy to advance community pharmacy and bring additional specialty pharmacy products and services closer to patients.
So far, Walgreens' partnership with Alliance Boots has been yielding positive results, with combined synergies reaching $140 million in the reported quarter. Moreover, Alliance Boots contributed 11 cents per share to Walgreens' first-quarter fiscal 2015 adjusted net earnings.
The company expects this joint synergy program to deliver approximately $650 million in fiscal 2015.
On a reported basis (including certain one-time items), net earnings came in at $809 million or 85 cents per share, an improvement of 16.4% or 18.1% respectively from the year-ago net earnings of $695 million or 72 cents per share.
Quarter in Detail
During the reported quarter, Walgreens' total sales reached $19.6 billion in the first quarter, registering sales growth of 6.7% year over year and a comfortable beat over the Zacks Consensus Estimate of $19.4 billion. This sales result came in line with the preliminary November sales figures posted by Walgreens in the first week of December.
In the reported quarter, Walgreens delivered solid performance across both its pharmacy and retail products businesses, which resulted in the top-line improvement.
Front-end comparable store (those open for at least a year) sales and basket size grew 1.5% and 4.2%, respectively, in the quarter. Overall, comparable store sales improved 5.7%. On the other hand, customer traffic in comparable stores was down 2.7%.
