Stronger sales from established stores helped Walgreen (NYSE: WAG,Stock Forum) trump analyst expectations for its fiscal first quarter, and the nation's largest drugstore chain said its acquisition of European health and beauty retailer Alliance Boots remains on track to close later this month.
Shares of the Deerfield, Illinois, company started climbing early Tuesday morning, shortly after it released results.
Walgreen Co. earned $809 million in the quarter that ended Nov. 30. That's a 16 per cent increase from last year's total of $695 million. Earnings per share climbed to 85 cents from 72 cents, and adjusted earnings in the latest quarter totalled 81 cents per share, excluding several one-time gains and costs.
Revenue rose nearly 7 per cent to $19.55 billion.
Analysts forecast, on average, earnings of 74 cents per share, on $19.43 billion in revenue, according to Zacks Investment Research.
Walgreen runs 8,230 drugstores and said revenue from stores open at least a year climbed 5.7 per cent in the quarter, helped by 8.1 per cent growth from store pharmacies.
Revenue from established stores is a key indicator of a retailer's health because it excludes the impact from recently opened or closed stores.
In August, Walgreen announced that it would exercise early its option to buy the remaining stake in Alliance Boots that it did not already own. Walgreen had bought in 2012 a 45 per cent share of the Swiss company, which runs the United Kingdom's largest pharmacy chain.
The company has scheduled a Dec. 29 shareholder vote on the deal. It said Tuesday that it has completed financing, and it expects the second step of its acquisition to close by Dec. 31.
The combined company will have unmatched global reach and purchasing clout among drugstore chains.
Walgreen shares climbed more than 3 per cent, or $2.48, to $76.75 Tuesday in premarket trading.
The stock has largely recovered from a dive it took in August after the drugstore chain lowered a forecast for the earnings it expects after combining with Alliance Boots. The company also announced then that it would not pursue an overseas reorganization with Alliance Boots that might have trimmed its U.S. taxes.
Those announcements came shortly after Walgreen said that former Chief Financial Officer Wade Miquelon was leaving. Miquelon later sued Walgreen.
Earlier this month, the company said that CEO Greg Wasson would retire after Walgreen completes the Alliance Boots deal.
Walgreen shares were up 29 per cent so far this year, as of Monday's close. That more than doubles the approximately 12 per cent gain recorded by the Standard & Poor's 500 index.