Earnings Call Excerpt
Here’s the entire text of the prepared remarks from Walgreen’s (ticker: WAG) fiscal Q1 2006 conference call (the company did not host a Q&A session):
Walgreen Co. Webcast First Quarter Ending Nov. 30, 2005
Jan. 3, 2006Hello, and happy new year to everyone! Welcome to Walgreens audio webcast for the first quarter ending Nov. 30, 2005. I’m Rick Hans, Walgreens Director of Finance, and I’d like to thank you for tuning in. We invite you to use this information in conjunction with the press release and other financial information posted on our web site.
Safe Harbor Language
Before we begin, I’d like to go over the safe harbor language. Certain statements and projections of future results made in this presentation constitute forward-looking information that is based on current market, competitive and regulatory expectations that involve risk and uncertainty. Please see our Form 10-K for the fiscal year ended August 31, 2005, for a discussion of factors as they relate to forwardlooking statements.[Preliminary and unaudited]
Sales and Earnings
Today we announced first quarter earnings were up 5.2 percent to $345.6 million, or 34 cents per share (diluted). That came on a sales increase of 10.2 percent to $10.9 billion. This year’s earnings were reduced by $36.2 million pre-tax or 2 cents per share (diluted) for employee stock option program expenses, as required by accounting regulations. Previously, these options weren’t expensed. You won’t see as great an impact in the remaining quarters this year because the accelerated expense for retirement eligible employees was $13.1 million of this quarter’s $36.2 million total. The long tenure of Walgreen employees causes this accelerated expensing. I should also note that last year’s quarter includes a pre-tax gain from litigation settlements of $15.0 million or 1 cent per share (diluted).Comparable sales
Taking a closer look at our sales, total comparable store sales – for stores open more than a year – were up 7.2 percent in the quarter, while front-end comparable store sales rose 6.4 percent.Comparable pharmacy sales in the quarter were up 7.7 percent, while total pharmacy sales climbed 10.3 percent. The number of prescriptions filled in comparable stores rose 5.0 percent.
We acquired 12 stores in the quarter while opening 115 new locations, including our 5,000 th store in Richmond, Va. That brought our store count as of Nov. 30 to 5,068, which includes 33 home care division locations but excludes 22 stores closed by Hurricane Katrina. We plan to open about 475 new stores this fiscal year, for a net increase after store relocations and closings of about 390. We’re also on track to reach our goal of operating more than 7,000 stores in 2010.
From the Balance Sheet and Statements of Cash Flows
The consolidated balance sheet and statements of cash flows can be found within our press release and at investor.walgreens.com, under the tab, ?Financials.
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