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DEERFIELD, Ill. - Walgreen Co., the nation's largest drugstore chain, on Monday reported a 14 percent increase in third-quarter profits, helped by rising prescription drug sales and a beneficial legal settlement.
The Deerfield, Ill.-based company said its operating margins were lower than its expectations, however, due in part to increased costs from new 24-hour stores.
Net earnings for the three months ended May 31 were $296.1 million, or 29 cents a share, compared with $259 million, or 25 cents a share, a year earlier.
Earnings for the quarter were helped by a $12 million credit from a vitamin litigation settlement.
Sales were $8.3 billion, up 13 percent from $7.4 billion a year earlier. Prescriptions, which accounted for 63 percent of sales, jumped 15 percent.
But the company said the boost in sales wasn't enough to offset higher costs, particularly payroll, for its 4,050 Walgreen drugstores.
"We registered good earnings overall, especially in this tough retail environment. But our operating results were below our plan," said chairman and chief executive David Bernauer.
Walgreen said its aggressive expansion plan remains on pace and that it will open about 120 stores between mid-July and the end of August, when its fiscal year ends.