Walgreen Reports a Hurricane Headache

Walgreen Co. (Deerfield, Ill.) announced its 31st consecutive year of record sales and earnings. But the nation’s largest drugstore chain said its net earnings per share for the fourth quarter of fiscal year 2005, ending August 31, were flat, due in part to a $54.7 million pre-tax charge for expenses associated with Hurricane Katrina.

The storm initially closed 74 locations, although about half of those re-opened within two weeks. Currently, 32 stores remain closed in New Orleans and the surrounding area.

Walgreen’s aggressive expansion program resulted in 435 new store openings during the year (371 net new after closings and relocations), including 172 in the fourth quarter alone. The company anticipates opening 475 stores in fiscal 2006, with a net increase of 390.

“We’re in excellent shape to continue our expansion plans while investing in new store technology and customer service initiatives,” said chairman and ceo David Bernauer. “The Medicare prescription insurance plan that takes effect Jan. 1, 2006, marks another important opportunity to grow our pharmacy business. The program will allow seniors to choose their pharmacy based on services and convenience — areas in which we excel.”