Walgreens reported a 16% year-over-year jump in third quarter profit, but was forced to withdraw its previously issued fiscal 2016 guidance because it missed Wall Street estimates.
The company’s net earnings for the quarter were $722 million compared to $624 million in the prior-year period. Net sales increased 6% to $19.4 billion from $18.3 billion, while same-store sales increased 4.8%.
Lower taxes also boosted the company’s profits, but pressure on pharmacy gross profit margins and a 0.7% decrease in same-store traffic kept them from hitting Wall Street’s expectations.
Despite withdrawing its guidance for fiscal 2016, Walgreens confirmed that it plans to move forward with its purchase of U.K. drugstore retailer Alliance Boots, which it currently holds a 45% stake in, by the end of 2015. The company will issue an update on the acquisition as well as its revised guidance in July or August.
“We continued to see improving top-line growth in the third quarter driven by increased daily living sales and strong increases in both prescriptions filled and our pharmacy market share,” said Walgreens president and CEO Greg Wasson. “At the same time, we are experiencing increased pressure on pharmacy gross profit margins. We maintained solid expense control in the third quarter to offset some of this pressure while understanding that there is more to be done. We will be accelerating our optimization efforts, including taking additional steps to lower expenses companywide. In addition, our joint venture with Alliance Boots continues to generate significant benefits.”