Walgreens' Quarterly Sales Beat Estimates

Reuters

Drugstore chain operator Walgreens Boots Alliance reported a better-than-expected quarterly profit, helped by lower costs achieved through its cost-cutting plan.

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The largest U.S. drugstore chain by store count said on Tuesday it would buy rival Rite Aid for $9.4 billion to widen its footprint in the United States and negotiate for lower drug costs.

Walgreens in April launched a plan to cut $1.5 billion in costs by the end of fiscal 2017, which would include store closures and freezing salary hikes for senior U.S. executives.

Sales at U.S. Walgreens and Duane Reade stores open at least a year rose 6.4 percent, benefiting from higher purchases per buyer.

Net income attributable to the company was $26 million, or 2 cents per share, in the fourth quarter ended Aug. 31, compared with a loss of $221 million, or 23 cents per share, a year earlier.

Excluding items, Walgreens earned 88 cents per share.

Net sales rose 49.7 percent to $28.52 billion, also helped by the company's acquisition of Europe's Alliance Boots in December.

Analysts on an average had expected earnings of 81 cents per share on revenue of $28.44 billion, according to Thomson Reuters I/B/E/S.

The company also said it suspended the balance of its $3 billion share repurchase plan to fund its Rite Aid acquisition.

Walgreens shares were up 0.6 percent at $95.75 in premarket trading on Wednesday.

(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Maju Samuel)