Walgreen 4Q Profit Hurt by Katrina
Chicago, Walgreen Co. reported a slim rise in its fourth-quarter profit and said sales were slowed by Hurricane Katrina and consumers’ increasing preference for generic prescription drugs over more costly name-brand ones.
Quarterly profit rose to $329 million, or 32? a share, for the fourth quarter, ended Aug. 31, from $324.4 million, or 32? a share, a year earlier. The increase in earnings was the smallest since the 1999 fourth quarter. Sales were $10.49 billion, up 11.3% from $9.43 billion a year ago, but $100 million less than analysts predicted.
Results included a $54.7 million pretax charge for expenses related to Hurricane Katrina damage, which cut quarterly earnings by 3? per share. The hurricane forced Walgreen to shut down approximately 74 stores in the Gulf region. Currently, 32 stores remain closed in New Orleans and the surrounding area.
The chain said it remains on plan to open 475 new stores in fiscal 2006—for a record net increase of 390—after 435 new-store openings in 2005.
“We’re in excellent shape to continue our expansion plans while investing in new store technology and customer-service initiatives,” chairman and CEO David Bernauer said. The retailer projected $1.4 billion in capital investments for fiscal 2006.
New Contract For Kroger Unions
New York City, Seven International Brotherhood of Teamsters locals representing 3,200 workers in Southern California have approved a new five-year contract for Kroger, the nation’s largest grocer by sales.
Kroger, Albertson’s and Safeway, the nation’s big-three supermarket chains, endured lengthy labor strikes last year, causing millions of dollars worth of losses.
Hurricane Update: Most Stores Closed Due to Rita Reopen
New York City, Even though Texas and Louisiana residents who fled Hurricane Rita remain displaced, the majority of retailers have restocked their shelves as they await the return of their customers.
Bracing for the wrath of Rita, Wal-Mart closed 155 stores on Saturday morning. By Sunday, all but 52 were open for business. Similarly, Target was able to reopen 28 of its 32 closed stores.
“While there was a disruption, it won’t be cataclysmic,” for merchants, said Scott Krugman, a spokesman at the Washington-based National Retail Federation. “This should have a minimum impact on nationwide sales.”
The Home Depot, the nation’s largest home improvement retailer, also reopened its doors in Texas and Louisiana. Furthermore, company spokesman Don Harrison said that over 100 trucks have been dispatched to bring additional supplies to Home Depot stores, so full shelves will greet their customers.