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Walgreens Earnings Slump But Private Label Strong

September 28, 2012
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In a rough fiscal fourth quarter that saw Walgreens’ same-store sales fall 8.7 percent from a year earlier, CEO Greg Wasson said the company remained optimistic about sales in its private label program.

Wasson told analysts on a conference call announcing the results that front-end sales – which fell only 1.3 percent from a year earlier, compared with a 12.8 percent year-over-year drop in prescription sales – were impacted by private brands.

“A lot of the work we’ve done over the past year, such as our effort to really accelerate private brand … the enhanced products we’re putting with fresh food and meal consumption and so forth, all that, we feel very good about being – delivered strong tailwinds for us,” Wasson said, according to transcripts from Seeking Alpha.

Walgreens launched its first loyalty card program, called Balance Rewards, on Sept. 16 and said on the call that it already registered 12 million users to the program. The loyalty program and private label were among key drivers in the quarter, CFO Wade Miquelon said.

“We continue to move our business forward against our key strategies, including our continued investment in our Well Experience pilot stores,” he told analysts. “We launched our new Balance Rewards program, which is off to a strong start, and we’ve dramatically accelerated and enhanced our private brand portfolio.”

Overall, fourth-quarter sales slumped 5 percent from a year earlier to $17.1 billion. Earnings fell 4.5 percent from a year earlier to 63 cents a share.

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