Walgreen Co., the largest U.S. drugstore retailer, said fiscal fourth-quarter profit dropped 55% after the loss of customers to rivals hurt sales.
Net income in the quarter ended Aug. 31 fell to $353 million, or 39 cents a share, from $792 million, or 87 cents, a year earlier, the Deerfield, Illinois-based company said today in a statement. Sales declined 5% to $17.1 billion.
The end of Walgreen's agreement to provide prescriptions for Express Scripts Holding Co. customers reduced quarterly profit by 6 cents a share as traffic shifted to CVS Caremark Corp. and Wal-Mart Stores Inc. Walgreen and Express Scripts renewed that contract in July, making the drugstore chain part of the benefits provider's network again Sept. 15.
Walgreen is "encouraged" by the return of former Express Scripts customers, Chief Executive Officer Greg Wasson told analysts today on a conference call. He declined to say how many customers had returned.
Excluding some items, profit in the quarter was 63 cents a share. Analysts projected 56 cents, the average of estimates compiled by Bloomberg.
Profit trailed analysts' estimates after adjusting for an additional 15 cents per share of charges, according to Ross Muken, an analyst at International Strategy & Investment Group in New York. He rates Walgreen underweight, the equivalent of a sell.
The shares fell 0.4% to $36.45 at 10:24 a.m. in New York. Walgreen had advanced 11% this year through yesterday.