No. 2 drugstore chain CVS (NYSE:CVS) continues to perform like the behemoth it is. The 4,179-store company today announced both fourth-quarter and full-year (ended Jan. 3) financial results -- as well as January same-store sales -- and the numbers, by and large, were impressive.
Revenues for the year improved 10% to a remarkable $26.59 billion, as same-store sales rose a solid 5.8%. Significant margin improvements -- gross margins jumped from 21% to 23%, while operating margins rose to 5.6% from 4.9% a year ago -- helped drive net income up nearly 18% to $847 million, or $2.07 per share. (CVS deserves credit for clearly stating the impact an extra week had on profits. Too many companies will mention that only when they had a shorter year and lower profits.)
The company continues to grow: It opened 150 stores during the year, closing 58. Internal controls, meanwhile, appear to be working: Exhibits A and B are the margin improvements mentioned above, while Exhibit C is the company's claim that inventory turns, which came in at 4.9 -- up from 4.6 last year (higher is better) -- beat internal targets for the year. (CVS also deserves credit for providing a balance sheet and cash flow statement along with the income statement in its earnings release.)
The good news appears to have continued into January, during which revenues improved 6.9% to $2.04 billion, and same-store sales rose 5.6% year over year.
Given the company's sustained performance, it's not surprising that its shares have outpaced the S&P 500 over the last 12 months. Investor attention continues to focus on the sector, with leader Walgreen (NYSE:WAG) reporting January "comps" up 9.1%, Drugstore.com (NASDAQ:DSCM) managing a quarterly EBITDA profit, and the continued saga of J.C. Penney's (NYSE:JCP) struggling Eckerd chain still sneaking into the news as its parent company looks for a suitable buyer.
Talk about CVS' remarkable run of results on our CVS discussion board.
Dave Marino-Nachison doesn't own any of the companies in this story. He can be reached via email.
