Deerfield Park, Ill. – A 16% year-over-year jump in third quarter profit still missed Wall Street estimates, causing Walgreen Co. to withdraw previously issued fiscal 2016 guidance. During the third quarter of fiscal 2015, Walgreen reported net earnings of $722 million, up 16% from $624 million in the same period the previous fiscal year.
Although lower taxes helped boost Walgreens’ profits, pressure on pharmacy gross profit margins and a 0.7% decrease in same-store traffic prevented them from meeting expectations. Net sales increased 6% to $19.4 billion from $18.3 billion. Same-store sales grew 4.8%.
Walgreens is continuing in its efforts to purchase U.K. drugstore retailer Alliance Boots, which it currently holds a 45% stake in, by the end of 2015. However, Walgreens withdrew a previously issued fiscal year 2016 forecast based on combined performance of the two companies. The retailer plans to issue an update on the acquisition and fiscal year 2016 expectations in July or August of this year.
“We continued to see improving top-line growth in the third quarter driven by increased daily living sales and strong increases in both prescriptions filled and our pharmacy market share,” said Walgreens president and CEO Greg Wasson. “At the same time, we are experiencing increased pressure on pharmacy gross profit margins. We maintained solid expense control in the third quarter to offset some of this pressure while understanding that there is more to be done. We will be accelerating our optimization efforts, including taking additional steps to lower expenses companywide. In addition, our joint venture with Alliance Boots continues to generate significant benefits.”