Walgreen Co. reported a fourth quarter net loss of $239 million, or 25 cents per share, compared with earnings of $657 million, 69 cents per share, for the same period last year. In the quarter, Walgreen absorbed an $866 million accounting charge from an early exercising of its option to buy the remaining 55 percent of Alliance Boots it does not already own. Excluding this event and other items, adjusted earnings-per-share were in-line with expectations at 74 cents, but despite meeting analysts’ expectations, there were few bright spots in management’s report. The benefits from Walgreen’s top line growth were largely offset by a significant reduction in gross margin.
Walgreen management discussed a number of issues that will continue to influence performance next year, including reimbursement pressure for prescription drugs, price inflation for generic medication and shrinking traffic on the store’s front end.
The earnings call comes a little over a month after the company shocked investors with a $2 billion forecasting blunder that cost two executives their jobs.
Following the difficult quarter, investors and observers are asking what the future holds for Walgreen.
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