Walgreen matches 4Q profit expectations, tops revenue forecasts
Walgreen booked a $239 million loss in its fiscal fourth quarter after swallowing a huge accounting charge from its Alliance-Boots acquisition, but the drugstore chain's beleaguered stock climbed after it posted results that met Wall Street expectations.
Walgreen Co. said Tuesday that it recorded a non-cash loss of $866 million in the quarter that ended Aug. 31 because it decided to exercise early its option to buy the remaining stake of Alliance-Boots that it did not already own.
The Deerfield, Illinois, company bought a 45 percent stake in Swiss health and beauty retailer Alliance Boots in 2012. It had until next year to decide whether to buy the rest of Alliance Boots, which runs the largest drugstore chain in the United Kingdom.
But the company said last month that it would complete that deal. Walgreen spokesman Michael Polson said that because the company exercised that option early, it had to remove from its books the future value that it represented, which led to the non-cash charge.
Overall, Walgreen lost $239 million, or 25 cents per share, in the quarter. That compares to a gain of $657 million, or 69 cents per share, in last year's quarter. Adjusted results, which do not include the Alliance Boots charge, totaled 74 cents per share.
That matched analyst expectations, according to Zacks Investment Research.
Walgreen's revenue rose more than 6 percent to about $19.1 billion, while analysts expected $19.02 billion.
Walgreen runs the nation's largest drugstore chain, with more than 8,200 locations.
It wrapped up a rough quarter Aug. 31 in which its stock price tumbled 16 percent while the Standard & Poor's 500 index climbed 4 percent over the same span. Much of that drop came in early August after Walgreen lowered a forecast for earnings it expects after combining with Alliance Boots.
Walgreen had announced the resignation of Chief Financial Officer Wade Miquelon a couple days before it provided that update.
It also announced that it would not pursue an overseas reorganization with Europe's Alliance Boots that could have trimmed its U.S. taxes. The drugstore chain said it wasn't sure such a move would pass IRS scrutiny, and it acknowledged feeling pressure to not pursue the move known as an inversion. Several politicians had criticized the company, which draws nearly all its revenue from U.S. stores, for even considering it.
On Tuesday, Walgreen shares climbed 2.3 percent, or $1.35, to $60.95 in premarket trading about an hour befpore the market open.