walgreen co (WAG*) Snapshot

The DEA announced that Walgreen Co. has agreed to pay $80 million in civil penalties to resolve the agency's allegations that it violated federal prescription painkiller distribution rules under the Controlled Substances Act. According to the DEA, Walgreens committed an unprecedented number of record-keeping and dispensing violations by allowing highly addictive controlled substances, such as oxycodone, to be distributed to abusers and illegally resold. Walgreens admitted that it failed to uphold its obligations as a DEA registrant, which requires it to flag suspicious prescription painkiller sales. As part of the agreement, six Florida Walgreens and a Florida distribution center are banned from dispensing various controlled substances for two years. The DEA considers Florida the epicenter of illegal prescription drug sales. Walgreens also agreed to enhance training and compliance programs and set up a special internal department to prevent future similar violations.

Walgreens won the judgment in Miami-Dade County Circuit Court against Dr. Siegal's Direct Nutritionals, a company headed by Dr. Sanford Siegal who has been selling his line of diet cookies since 1975. The lawsuit concerns a 2009 agreement between Siegal and Walgreens in which he guaranteed sales on all products sold at Walgreens. Walgreens purchased over $5.4 million in Siegal's cookies and the company is owed the $2.6 million, plus interest, for products that went unsold.

Walgreen Co. reported sales results for the month, quarter and year to date ended May 2013. The company had May sales of $6.22 billion, an increase of 4.3% from $5.97 billion for the same month in fiscal 2012. Total front-end sales increased 3.4% compared with the same month in fiscal 2012, while comparable store front-end sales increased 1.2%. Customer traffic in comparable stores decreased 3.5% while basket size increased 4.7%. Total sales for the third quarter of fiscal 2013 were $18.34 billion, up 3.3% from $17.75 billion in the third quarter of fiscal 2012. Comparable store sales for the third quarter of fiscal 2013 increased 1.3%, while front-end comparable store sales for the quarter increased 0.3%. Prescriptions filled at comparable stores increased 7.0% in the third quarter and comparable pharmacy sales increased 2.0%. Calendar 2013 sales to date were $30.27 billion, an increase of 2.9% from $29.41 billion in 2012. Fiscal 2013 year-to-date sales for the first nine months were $54.30 billion, down 0.5% from $54.56 billion in the comparable period in fiscal 2012.