Walgreen Meets Expectation In Complicated Q4

For the fiscal year ended August 31, Walgreen Co. posted GAAP net earnings of $1.93 billion versus $2.45 billion in the year-earlier period and net earnings per diluted share of $2 versus $2.56 in 2013. Adjusted net earnings for the fiscal 2014, the company reported, were $3.2 billion, up from $3 billion in the year prior, and adjusted net earnings per diluted share were $3.28, up from $3.12 per diluted share in fiscal 2013.

Net sales were $76.39 billion versus $72.22 billion in fiscal 2013, the company noted

Walgreen stated that combined synergies for Walgreen and its European strategic partner, Alliance Boots were $491 million in fiscal 2014. Alliance Boots contributed six cents per diluted share to Walgreen fourth quarter 2014 adjusted net earnings.

In the fourth quarter, GAAP net loss was $239 million versus net earnings of $657 million in the period last year and net loss per diluted share was 25 cents versus earnings of 69 cents per diluted share in the year-ago period. Adjusted fourth quarter net earnings were $714 million, up from $702 million in last year’s period, and adjusted net earnings per diluted share were 74 cents, up from 73 cents in the 2013 frame, Walgreen related.

A published Thomson Reuters analyst estimate called for adjusted earnings per share of 74 cents for the fourth quarter.

Fourth quarter net sales increased 6.2% to $19.06 billion, Walgreen stated, while front-end comparable store sales, including general merchandise such as home goods, increased 1.3% versus the year-earlier period.

According to Walgreen, customer traffic in comparable stores slipped 2.2% but basket size increased 3.5%. Total store comp sales, including pharmacy, gained 5.4%, Walgreen maintained.

The fiscal 2014 fourth quarter suffered a non-cash loss of $866 million, or 90 cents per diluted share, on the amendment and exercise Walgreen’s Alliance Boots call option, Walgreen pointed out. The non-cash loss in the fourth quarter resulted from a reduction in the amended option’s fair value, without regard to its strategic value, versus the original option’s book value, primarily due to the reduction in the duration of the amended option and the appreciation since the original valuation in the price of Walgreen stock to be used as partial consideration for the purchase of the remaining 55% ownership interest in Alliance Boots, Walgreen asserted.