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Walgreen Company (WAG)
Walgreen Receives a Shot of Success with Pharmaceuticals
The Walgreen Company beat out Wall Street predications with its fourth quarter performance today. Although profit declined from this time last year, it managed to top analysts' expectations. Walgreen also saw its overall sales rise 7.6 percent. The largest U.S. drugstore has been battling increasing competition from CVS (CVS: Charts, News, Offers) and Rite Aid (RAD: Charts, News, Offers), but its fourth quarter report comes as promising news for most investors. How was Walgreen able to post such an impressive quarterly performance? What are the drugstore chain's plans for the future?
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Walgreen launched an intensive cost-cutting initiative, which has helped improve profit margins. The drugstore chain has been focusing specifically on streamlining its inventory and in-store setup. Walgreen feels that this will not only help reduce expenses but also improve the customer's shopping experience. In addition, Walgreen has been gradually reducing the number of store openings, which has given it more time and resources to channel towards its cost-cutting efforts. However, a big reason behind its impressive fourth quarter performance was its pharmaceutical sales. Despite its recent success, Walgreen realizes that it cannot stay complacent in such a competitive industry.
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The largest U.S. drugstore intends to build off its pharmaceutical sales' positive momentum. As a result, Walgreen just launched today a program that will allow customers to get a 90-day supply of certain prescriptions at its stores. The program's goal is to generate more in-store prescription sales as it tries to attract consumers, who prefer to order their medicine in a brick and mortar setting as oppose to online. Walgreen has also arranged an agreement with Caterpillar Inc. (CAT: Charts, News, Offers) so it can directly supply prescriptions to Caterpillar workers and retirees at the start of next year. In addition, the drugstore is making a strong effort to increase the number of Walgreen health and wellness centers at various corporate offices. Walgreen intends to complement its pharmaceutical sales expansion efforts by continuing its cost-cutting initiative.
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The Walgreen Company seems to be moving in the right direction as it works to further improve its profit performance. Its cost-cutting program and pharmaceutical sales have been impressive and key contributors to its recent success. However, there is outside concern that Walgreen's cost-cutting efforts will take a considerable amount of time before making a major impact on its profit margin. Walgreen was also late to the market with its 90-day prescription service as its rival, Rite Aid, has already launched a similar service. Walgreen is hoping that it has prescribed itself the right medicine for future success.
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Additional Walgreen's News
Cat Deal with Walgreen will Lower Drug Costs-- A closer look at Walgreen's agreement with Caterpillar (CAT: Charts, News, Offers).
Walgreens Launches National Initiative for 90-Day Prescriptions at Community Pharmacies -- An in-depth breakdown of Walgreen's new 90-day prescription service.
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