I am an employee and "long" so don't take this the wrong way, but am I missing something that has other "longs" so excited about the earnings released yesterday? I mean, that report contained a full quarter of the most brutal cost cutting in the history of the company. It even had an extra day of sales over the previous year. Yet with all that, and sales growth in the low-mid teens reported each month, plus respectable same store sales growth, they were only able to post about a 5% growth in PROFITS over the same quarter last year (traditionally their best quarter), and they beat what were much-lowered expectations. I think something is wrong with that. To me, the 4-cents of so-called "growth" was not a product of a true business gain, but instead was just a small portion of the money saved by the cost cuts, mainly staffing. Without that Walgreens likely reports a huge loss. Right? So, what is there to be so excited about? I mean at some point real soon they'll have to start increasing the earnings by new or improved business opportunities as there's only so much any company can cut, and they'll soon be up against quarters where these same cuts have already been made. Does anyone know when infusion, compounding, clinics, or even the recent business purchases can be expected to be additive to earnings? That's a question I see asked here a lot. So, I'm nervous as hell about that report and trying to find a reason not to sell. I'm surely not looking to buy here unless I'm really overlooking something big. The gentleman who runs CVS was on CNBC yesterday morning claiming to be comfortable that they will easily grow profits AT LEAST 13-15% this year and for the forseeable future, and that makes Walgreen's 5% profit growth look even worse to me. So I guess I'm not a buyer here, but somebody please tell me why I shouldn't be a seller of what I already hold. I'm hoping that as an employee I'm too close to see what might be obvious to someone outside, but I don't think so. Thanks in advance for any constructive or informative answer.
I have to admit that I am new here and I don't have WAG down cold yet, but... What caught my attention is not the retail drugstore operations, it's the evolution of WAGs business. Clearly what has been missing in WAG v. its peers is growth. As I see it increasing the amount of stores they have so aggressively has been in response to this fact... I love the growth in stores, but it's only an incremental maneuver on its own.
The creation of the new health and wellness division in my mind signals a compelling avenue for growth. It seems to me (maybe you know better), that the guys at the top are aggressively going after long term growth and thinking out of the box to do it. The recent changes are not going to have an immediate effect on the bottom line, but thinking long term I think that they will be the source of adrenaline WAGs been needing.
I don't flip stocks quickly, so that factors into my thinking, but IMHO it's a great time to be long. Once again, being new here, I am just compelled by WAG, because the one thing that seems to have been missing now might just be on the horizon.
One factor for the small earnings increase was that they were up against a 24.5% increase from last year (second quarter) first quarter last year was 24.9% and in the third quarter last year it's 19.6%. The fact that there was that much of an increase at all is their reason to be excited.
I haven't spent the time yet reviewing the numbers in detail, but as humans we tend to hear what we want ... if you are bullish you focus on higher numbers, if you are bearish you focus on one extra day, big flu season etc.
We all have our own filters and want to believe news that supports us. And if it is supportive we believe it more than we discount information that doesn't fit our thinking.
I was hoping for a bigger bang this quarter too, but it was still a good day for Walgreens. IMO, cost cutting has been done mostly w/o affecting customer service and morale, but management is walking up to that line. I hope management doesn't go too far that it affectes recruiting. For example, the most recent 401k match was nothing to brag about. Previously, it was a major tool for recruiters.
Gee, we are all stupid and we can't figure out that an after midnight post, from a newly created ID, from someone claiming to be NOT ONLY an employee, but a LONG, couldn't be the gutless Board Moron posting under another of his endless IDs! Don't forget the multi-starring also!
I am pleased with the increase of 2 cents over analysts' expectations in a quarter that saw HUGE gains the previous year. All of the new business that Wag has just acquired NOW, will be extremely beneficial in the future, just like the decisions reached 5-10 years ago are benefiting the company TODAY! The sales are strong and the profits were great and they have shown that they can control expenses AGAIN, like we used to do, so I think Wag is on the right course for continued SUCCESS. As for BM, he is destined for continued FAILURE as per usual, railing against a company he doesn't own a piece of and falling further and further behind the people who do and it couldn't happen to a more deserving LOSER! You were FIRED BM, get over it!
Someone else said it best when they said, "This is a stupid game you play sonny. Run along and play."
I AGREE! LOL!
you are one stupid loudmouth bash. Very good points on the original post and rev was light and missed the first call number, cvs is whipping our azz and this 3 bucket approach to leveraging the box has me worried. We can't be all things to all customers. We have had like 7 misses in the last 12 qtrs and I think we have missed q4 for 3 years in a row so take off your rose colored glasses and hope like heck JR know what he is doing.
First I'd like to thank those who so far gave their input, though none have increased my comfort level.
"Bananarug4" (sorry if I didn't remember your proper names here as your posts disappear when I place a reply... I'm kinda new at this) I don't know what knowing what brush cleaning has to do with being able to post here and ask for an opinion, but if that's important I will drop it here for you to evaluate (and hopfully you can read between the lines). "Taiguy..." I don't know where you work but in my area morale is at an all-time low. We are losing experienced people throughout the area. Also, the 401k you brought up has hurt retention with more than just the match you mentioned as until this year there was a contribution limit which severely limited the size of some key people's accounts as most stocks recovered over the past seven-eight years (unfortunately, not ours). A few have compared this with those of their friends working elsewhere and stated that as one reason for moving on. Hopefully removing that limit will help. "Basher..." I was up after midnite because after a long day putting out fires it was my first chance to catch up. I go in later on Tuesdays to see what happens at night so I had a few minutes to respond now before walking out the door. I don't know what your comment about "stars" was about as I see my original post only earned 2. I thought that was bad... right? Oh well, I'll let all you experts fight out these meaningless details. Maybe a stock message board wasn't the right place to raise a serious question. I'm never 100% positive or negative on anything so I'm thinking I'd have a hard time fitting in here.
I have to disagree with both of you. The original poster expressed concerns about the quality of earnings this quarter and both of you attacked him personally rather than dealing with the issues.
BR, you say you didn't, but as a reader I thought it was an attack on his veracity. BD, you went so far as to call the poster the BM.
If there is ever to be dialog on this board we can't take each negative statement and personalize it to disgrace it.
That's what Hillary does ... don't be a Hillary. (look out for those snipers)
In terms of ROCE, the earnings increase was, in fact, rather anemic. There were 125 new stores opened in the QTR, by recollection, and the capital used to fund this ridiculous strategy is enormous. The extra day and calendar changes were the major (and non-recurring) source of improvement. WAG also benefitted from its release coinciding with an exuberant trading day on the street, leading to today's inevitable pullback.
The "Wellness" initiative actually makes a lot of future sense. Walgreens paid WAY too much for its initial foray into this business, but the future will see the wellness sector as one of the 3 cornerstones of healthcare management, so I think it makes sense. A lot more sense than opening largely unneeded new stores and narrow-menu clinics.
The clinic strategy is patently ridiculous. It is a poor investment for both Walgreens and Walmart. Fully implemented, it will inevitably lead to another series of USA Today articles, a few years down the pike, ridiculing a retail chain's asinine entry into an alien domain... with horrific morbidity results and legal charges to drain shareholder value and Corporate reputations.
If Walgreens is to show promise as an INVESTMENT it must cease its childish new store expansion program. This failing, it can only launch broadened expansion strategies by ramping up cost reductions in the retail drugstore unit or by borrowing lots of money it has never needed, previously. The first choice destroys customer satisfaction. The second choice leads to an earnings malaise when inflation eventually pushes rates higher.
No need to rush into a sale. With your 10% employee stock discount and the still depressed S/P you have time to watch the action before making a "sell" decision.
I'm getting a headache following the logic trail. That being said, yes I am sometimes passive agressive.
I just can't understand the need to question someone's motives on a yahoo message board. If we all deal with the company and the stock, the rest takes care of itself.
Whether this person is an employee or not, if he sticks around it will become transparent. If he is chased away by accusations, we lose a contributing poster.
"Whether this person is an employee or not, if he sticks around it will become transparent. If he is chased away by accusations, we lose a contributing poster."
This is definitely Yank trying to do his passive bashing using the guise of being an employee! He has done this over the years numerous times and he is easy to spot, that's why Bananarug asked some simple employee questions, because he was suspicious like I was! Yank can talk the talk of a low level Wag employee, but I don't think he ever progressed beyond the lowest of assistant managers before he was dumped. He COULD have been a contributing poster here, even with his negative views, but he burned his bridges from the get go, with his made-up stories(douche rebate) and other continuous lying, not to mention all of his hundred IDs! JMHO!
Good original post. I thought it would be .71 so I'm somewhat disappointed as well.
Expenses (which lead to net income) were higher because, according to the conf call, the many store openings in Q2. They opened I think 150+, which is a lot considering December is usally shut down to concentrate on Xmas. They also purchased a lot of real estate, but I'm not sure that makes it to the income statement. Unfortunately real estate prices for hot commercial corners is still high.
I look forward to the day when WAG will eventually have slower store growth and much higher profits. FYI -New stores don't become profitable until 2+ years. But then they are a 15% returner - good annuity (a Jorndt saying)
This is what they are saying!
"I would take a long position in Walgreen’s (WAG). Currently trading at $38.01, they beat Wall Street estimates this month. They now have their cost control in order and should have their stock price move between $42-$45. Walgreen’s also pays a 1% dividend."