CHICAGO (Reuters) - Drugstore chain Walgreen Co. (WAG) on Monday said quarterly profit rose 6.6 percent on strong demand for Christmas and Valentine's Day merchandise, even as a weak flu season impacted its pharmacy business.
The retailer, which operates more than 5,100 stores across the United States, said profit was $523.5 million, or 51 cents per share, in the fiscal second quarter ended February 28, compared with $490.9 million, or 48 cents per share, a year earlier.
Walgreen said its results included the effects of expensing stock options, which reduced earnings by $27.4 million pretax. Analysts, on average, expected earnings of 52 cents per share, according to Reuters Estimates.
Sales rose 10.7 percent to $12.2 billion. Sales at stores open at least a year, a key measure of performance for a retailer, rose 6.5 percent.
"Pharmacy sales increases faced a strong headwind from a flu season that didn't generate as many doctor visits as a year ago and, as a result, fewer prescriptions," Rick Hans, Walgreen director of finance, said in a statement.
Prescription sales, which accounted for 61.5 percent of sales in the quarter, climbed 11.1 percent. At stores open at least a year, the number of prescriptions filled increased 3.5 percent.
Walgreen, which operated 5,156 stores as of February 28, competes with an increasingly powerful rival in CVS Corp. (CVS), which acquired 1,200 Eckerd drugstores in 2004 and is set to buy about 700 drug stores from Albertsons Inc. (ABS) this summer. CVS had 5,478 stores as of February 25.
Walgreen said it still on track to have more than 7,000 stores in 2010.
Shares of Walgreen, whose overall sales are greater than those of CVS, trade at about 25.9 times this year's estimated earnings. CVS, by comparison, has a multiple of 19.