Longs Drug Stores Corporation Reports First Quarter Results
Commenting on the quarter, Chairman, President and Chief Executive OfficerWarren F. Bryant said, "We are pleased with our increase in earnings. We havecontinued our focus on executing our strategic initiatives, all of which aredesigned to improve our operating performance and our competitive position.
"These initiatives are playing an important role now and will do so in thefuture as we operate in an uncertain economy and as we continue to invest inthe growth of our retail store base and in RxAmerica," Bryant said.
During the first quarter, Longs Drugs repurchased one million shares ofcommon stock at an average price of $39.23 per share, for a total investmentof $39.3 million. Approximately $117 million remains under the current Boardauthorization for stock repurchases.
Income from continuing operations for the first quarter ended May 1, 2008was $23.1 million, or $0.63 per diluted share. Income from continuingoperations for the first quarter ended April 26, 2007, was $16.0 million, or$0.42 per diluted share, including a $5.5 million after-tax net charge, or$0.14 per diluted share, related to the disposition of stores.
Total revenues of $1.41 billion for the thirteen weeks ended May 1, 2008were 8.5 percent higher than the $1.30 billion reported for the thirteen weeksended April 26, 2007.
Retail drug store sales increased 2.9 percent to $1.22 billion from $1.19billion in the comparable period last year. Same-store sales increased 1.0percent with pharmacy same-store sales increasing 0.5 percent and front-endsame-store sales increasing 1.5 percent. Pharmacy sales were 52.4 percent ofretail drug store sales during the period, consistent with the comparableperiod last year.
Pharmacy benefit services revenues increased 67.3 percent to $187.3million from $112.0 million in the comparable period last year. Prescriptiondrug plan revenues were $167.1 million compared with $96.6 million last yearand pharmacy benefit management revenues were $20.2 million compared with$15.4 million a year ago.
Retail Drug Store Gross Profit
Retail drug store gross profit for the first quarter ended May 1, 2008 was$325.2 million, or 26.7 percent of retail drug store sales, compared with$304.0 million, or 25.6 percent of retail drug store sales, last year. Theincrease in gross profit as a percent of sales was primarily due to highergeneric utilization, increased self-distribution of front-end merchandise andimproved inventory management.
The LIFO charge for the first quarter ended May 1, 2008 was $3.5 millioncompared with $3.0 million in the first quarter last year.
Prescription Drug Plan Gross Profit
Prescription drug plan gross profit for the first quarter ended May 1,2008 was $4.0 million, or 2.4 percent of prescription drug plan revenues,compared with $4.1 million, or 4.2 percent of prescription drug plan revenues,last year. As expected, the lower gross profit margin on increased revenuesreflects the Company's bids submitted for the 2008 plan year.
Operating and Administrative Expenses
Operating and administrative expenses for the first quarter ended May 1,2008 were $309.7 million, or 22.0 percent of revenues, compared with $286.3million, or 22.1 percent of revenues, last year. The decrease in the expenserate reflects increased leverage on higher revenues.
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