Walgreen Co (WAG), the operator of a network of drugstores, swung to a net loss for the quarter ended Aug. 31, 2014. A sharp increase in other expense has pushed the company into loss during the quarter. The company made a net loss of $239 million or $0.25 a share in the quarter against a profit of $657 million or $0.69 a share in the previous year period. Adjusted earnings per share met the analysts' expectation of $0.74.
Revenue during the quarter grew 6.22 percent to $19,057 million from $17,941 million in the last year period.
Gross margin contracted by 98 basis points over the previous year period to 27.95 percent. Total expenses as a percentage of revenues increased to 95.62 percent from 94.96 percent in the same period last year. That has resulted in contraction of 65 basis points in operating margins to 5.08 percent.
The company disclosed operating income of $969 million, compared with $1,029 million in the last year period.
''Our fourth quarter performance was in line with our expectation, recognizing we have much more to do. We closed the fiscal year by exercising the option for the second step of our strategic transaction with Alliance Boots, completing the transition of our pharmaceutical distribution to AmerisourceBergen and driving continued improvement in our daily living business that resulted in our largest year-over-year quarterly and fiscal-year sales increases in three years,'' said Walgreens president and CEO Greg Wasson.
Cash Flow
Walgreen has generated cash of $3,893 million from operating activities during the year, down 9.49 percent or $408 million when compared with the last year period.
The company has spent $1,731 million cash to meet investing activities during the year, as against cash outgo of $1,996 million in the last year period. It has made net capital expenditure of $900 million during the year, which was lower by 15.65 percent or $167 million, from a year ago.
The company's free cash flow accounted for 76.88 percent of operating cash flow for the year, compared with 75.19 percent in the last year period.
The company has spent $1,622 million cash to meet financing activities during the year, as against cash outgo of $1,496 million in the last year period. It has made net repayment of $550 million debt during the year. It has spent net of $93 million on repurchase of common stocks.
The company's cash dividend payment increased 15.29 percent or $159 million to $1,199 million. Dividend payment accounted for 30.80 percent of operating cash flow for the year, compared with 24.18 percent in the same period previous year.
As on Aug. 31, 2014, the company's cash balance stood at $2,646 million, up 25.64 percent or $540 million from Aug. 31, 2013.
Working Capital
Walgreen Co has witnessed an increase in the working capital over the last one year. The company's working capital stood at $3,347 million as at Aug. 31, 2014, up $356 million or 11.90 percent from $2,991 million on Aug. 31, 2013. It registered an increase in current ratio to 1.38 as at Aug. 31, 2014 from 1.34 on Aug. 31, 2013.
Debt Position
Walgreen Co has witnessed a decline in the total debt over the last one year. As on Aug. 31, 2014, total debt stood at $4,510 million, down 10.64 percent or $537 million, from Aug. 31, 2013. The company's total debt was 12.13 percent of total assets as on Aug. 31, 2014, compared with 14.22 percent on Aug. 31, 2013. Interest coverage ratio, which determines how easily a company can pay interest expenses on outstanding debt, has improved to 22.53 from 18.71 in the same period last year.
Shares of the company declined $0.58 or 0.96 percent to settle at $59.60 on Monday.
