By Bob Johns
Through a variety of initiatives, the pharmacy giant achieved record sales and free cash flow.
Walgreens, the 8,116-location drugstore chain, posted record profits for its fiscal 2013 year ended August 31, 2013. Not only did the company achieve record sales of $72.2 billion for the year, but it also achieved a GAAP earnings increase of 86.4% for the fourth quarter versus a year ago. All of this has led to record free cash flow of $3.1 billion, a great indicator of the retailer’s financial health going forward. Walgreens President and CEO, Greg Wasson touted the earnings report as a win for the company and investors, saying “We closed the year with record sales and record free cash flow, and we were able to return more than $1 billion to shareholders during fiscal 2013 as we increased our dividends for the 38th consecutive year.”
A large part of Walgreens’ success can be attributed to the rapid rise of its loyalty program. “Extraordinary response to our Balance Rewards loyalty program, now with more than 85 million enrollees, gives us a wealth of new insights to increase customer delight,” Wasson notes. According to a company press release, members are participate in additional health-related activities and goal tracking to earn points through walking, running, and weight-management goals that can be logged and tracked through “Steps with Balance Rewards.” This all plays into the company’s goal of understanding the customer, helping the customer achieve better health, and offering increased health services.
In 2013, the company provided more than 8.5 million immunizations, an increase of 1.8 million over fiscal 2012. Walgreens has become the largest retail provider of flu immunizations in the country, and is currently partnering with the United Nations Foundation to provide immunizations to children in developing countries. The program, dubbed the Shot@Life campaign, will supply up to 3 million children with immunizations they would normally never have access to.
Walgreens also grew through acquisition this year, having acquired the USA Drug chain. Additionally, the company announced the acquisition of 76 Kerr Drugs locations. This acquisition is still pending, and it is expected to close prior to the end of the calendar year.
All of these programs and acquisitions lead to a very bright outlook for Walgreens going forward. “Looking ahead, we begin the new fiscal year well positioned to build on the momentum we have coming out of a solid fourth quarter,” Wasson said. “We are advancing our key strategies with a continued focus on disciplined execution, and are addressing the challenges ahead in a difficult consumer environment and changing health care system.”