Walgreen Co. said Monday that earnings in its fiscal first quarter dropped 23 percent, largely because of the loss of the investment tax credit under the new tax law and the $65 million purchase in June of 66 Medi Mart stores.
The Deerfield-based chain said earnings fell to $13.2 million, or 22 cents a share, from $17.2 million, or 28 cents a share, in the year-earlier period ended Nov. 30. Sales rose 17.4 percent, to $960.3 million from $817.7 million.
Drugstore division sales continued very strong, rising 18.5 percent from a year earlier. Prescription sales again led the way, with a 30.7 percent increase.
Interest expense during the quarter from borrowings to finance the Medi Mart purchase was $1.3 million, or 1 cent a share. Earnings also were hurt by opening 29 new drugstores and remodeling 61.
”The loss of the investment tax credit, retroactive to Jan. 1, 1986, resulted in a 4 cents-per-share charge for the quarter versus a 2-cents credit in the first quarter last year, or a swing of 6 cents per share–more than $3.6 million. We estimate the net effect of the new tax law as an 8 cents-per- share loss, or nearly $5 million for the year,” said Chairman Charles R. Walgreen III.
Walgreens said it increased its market penetration in 32 of its top drugstore markets in 1986. The company is now ranked No. 1 or No. 2 in 37 of its top 50 markets, it said. At least 100 new stores will open during 1987 in virtually all these major markets.
