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Walgreen's fourth quarter profit rose less than analysts expected, and the Deerfield, Ill.-based drug chain also posted its smallest quarterly sales increase in at least a decade.
Fourth quarter profit rose nearly 12 percent to $443 million, or 45 cents a share, but included a positive vacation accrual payment adjustment of $79 million. Sales increased 8.8 percent to $14.6 billion for the fourth quarter, and 9.8 percent to $59 billion for the year.
Analysts said the chain's earnings were hit by lower margin businesses like in-home medical services and a discounted product strategy to lure consumers that failed. Walgreen said it plans to "moderate" its discounts and promotions after lower prices failed to boost revenue in the quarter.
Walgreen filled 0.6 percent more prescriptions in stores open at least a year than it did a year ago. Prescriptions accounted for 66 percent of sales in the quarter. The chain said overall U.S. retail prescription volume fell 1.9 percent in the same period, excluding Walgreen. The company expects to open 495 net new stores in fiscal 2009. It operated 6,443 stores as of Aug. 31.