Amid declining fiscal second quarter earnings, as a slowdown in generic drug introductions and bad weather contributed to a performance that missed Wall Street's profit expectations, Walgreen Co. announced plans to close 76 stores in the second half of its fiscal year.
The Deerfield-based company said the closings will "optimize the company's asset base."
Walgreen shares rose $2.09, or 3.3 percent, to $66.40 in premarket trading about 45 minutes before markets opened Tuesday and after the company reported its quarterly results. The stock started 2014 strong, hitting an all-time high price of $69.84 at the end of last month before retreating. Shares were up 12 percent so far this year, as of Monday's close.
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The drugstore chain and its competitors have been helped in recent quarters by an influx of generic drugs. These cheaper alternatives to branded medicines squeeze sales but help profitability because they come with a wider margin between the cost for the pharmacy to purchase the drugs and the reimbursement it receives.
But that benefit has waned as the flood of new generic drugs seen in recent years has slowed. Walgreen Co. said Tuesday that its revenue managed to grow 5 percent in its fiscal quarter despite that challenge, severe weather that tends to keep customers away from its stores and a comparison to last year's more-severe flu season, which generated more business.
Overall, the nation's largest drugstore chain earned $754 million, or 78 cents per share, in the quarter that ended Feb. 28. That's down from $756 million, or 79 cents per share, a year ago. Adjusted earnings were 91 cents per share.
Analysts expected 93 cents per share, according to FactSet.
Its revenue rose to $19.61 billion from $18.65 billion a year ago and matched Wall Street expectations.