For its fiscal 2003 first quarter (ended Nov. 30), sales increased 14% to $7.5 billion, and comp sales rose 8.6%. Prescription drugs accounted for 63% of sales, and rose 19.7% on a total basis and 14.7% on a comparable basis.
Excluding one-time gains, earnings shot up 21.2% to $221.2 million, or $0.21 a share. In the year-ago quarter, the country's largest drugstore earned $182.5 million, or $0.18 a share.
Comp sales for front-end items -- makeup, magazines, and whatnot sold in addition to prescriptions -- were flat this quarter. Those items did produce higher margins, though, helping the company's gross margin grow to nearly 27%.
Walgreens sold more generic prescriptions this quarter than last, contributing to the increased gross margin. Generics offer much better margins than their brand-name counterparts (not to mention bigger discounts for customers).
The company didn't release its full balance sheet today, but one important item is in good shape: Inventories lifted only slightly compared to sales at 2.7%. That's a great sign for the company's cost controls and ability to execute well in a tough environment.
Walgreens is charging ahead with expansion plans for fiscal 2003, planning to open 450 new stores and spend $1 billion in capital expenditures. Currently, there are nearly 4,000 Walgreens stores in 43 states and Puerto Rico.
Already the top-dog druggist around, it's apparently going to grow even larger. If Walgreens can find a formula to better balance front-end sales with growing generic-prescription fills, shareholders should continue to see healthy results for some time to come.