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Walgreen Co. Message Board

  • rgsam54 rgsam54 Jun 18, 2008 10:24 PM Flag

    High fuel cost affect earnings

    Since Wags has their own distribution (their own fleet of transportation). How much of an affect does this have on walgreens earnings per share. It has to affect it but how much. Any thoughts.

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    • The cost of fuel will have no effect on earnings since Wag leases their trucks for the distribution centers they own and they have already raised their prices to cover the cost of the fuel increase. Also they have a large oil reserve cistern, unknown by most people, under 200 Wilmot Road, that they have used to fuel their fleet for years. NON FACTOR ISSUE IMHO!

      • 2 Replies to stkpckrwnrr
      • I disagree. They can't raise their prices on the RX part of their business as there is not fuel adjustment clause in the contracts that I know of. They have to be careful raising their prices on the OTC side as if they get too high the customers will go to the wallys of the world. Further there will be a lag between the energy cost increase and the time they react to the increase. So they will lose a little margin there. Electricity and nat Gas which is still over $12/mmbtu up from 8 a year ago and 5 two years ago and 3 4 years ago has hurt them some already. As energu costs go up they will be at more and more of a disadvantage as they have a small footprint to cover the costs where the mass boys have large ones to divide the cost increase.

      • Thanks,

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