Executive Summary

Walgreen's generic drug sales, along with the firm's lntercom pharmacy system, helped the chain increase Rx sales in the third quarter ended May 31 by 26.2%, the company reported July 10. "Prescription sales, continuing to benefit from the Intercom computerized pharmacy system and strong generic sales, were up 26.2% for the quarter and 25.8% for the nine months," Walgreen said. Drug store division sales also remained strong, increasing 16.3% in both the quarter and nine-month periods. Corporate earnings advanced 12.0% in the third quarter, to $21.5 mil., while sales increased 15.7% to $792.6 mil. The firm commented that earnings during the fiscal year have been affected by the chain's aggressive expansion program. Noting 87 units have opened in the first nine months of the year, Chairman Charles Walgreen III, commented: "With 21 new stores planned for the fourth quarter, we'll have opened 108 stores this fiscal year -- - well exceeding our goal of 100. While this pace affects short-term profitability, it also helps us achieve optimum market penetration and positions us for positive future results." As of June 30, the firm operated 1,178 drugstores and restaurants. With hospital cost-cutting efforts continuing, American Hospital Supply reported an 11% drop in second quarter earnings to $53.4 mil., on a 3% sales drop to $834.7 mil. "Sales were stronger than expected, especially in view of the continuing soft market for hospital products and services," AHSC Chairman Karl Bays commented. He added that gross margins were "more than one-half percent higher than the previous quarter and equalled the second quarter of the year before." Chart omitted.