Woonsocket-based CVS Corp., the second-biggest U.S. drugstore chain, announced Thursday record sales and earnings for the fourth quarter and fiscal year ended Dec. 31, 2005.
Net earnings for the fourth quarter increased 59.3 percent to a record $406.4 million or 48 cents per diluted share, compared with net earnings of $255.1 million or 30 cents per diluted share in the fourth quarter of 2004.
Seifert Systems Invests in Energy Efficiency to Strengthen Operations
For manufacturers, energy is more than just another operating expense. It plays a critical role…
Learn More
Net earnings for the full year 2005 increased to a record $1.2 billion, or $1.45 per diluted share, up 31.8 percent from $1.10 per diluted share reported in 2004. The company generated more than $650 million in free cash flow for the year.
Fourth-quarter results were driven by healthy sales growth and a significant improvement in gross margin, the company said, driven primarily by the increasing usage of generic drugs.
Net sales for the 13-week period ended Dec. 31, 2005 increased 9.1 percent to a record $9.7 billion, up from $8.9 billion during the 13-week period ended Jan. 1, 2005. Same-store sales (sales from stores open more than one year) for the quarter rose 6.7 percent, and were benefited by approximately 149 basis points from the inclusion of approximately 1,100 stores acquired on July 31, 2004.
Pharmacy same-store sales increased 6.3 percent and front-end same-store sales increased 7.7 percent. For the full year of 2005, total sales increased 21 percent to a record $37.0 billion, compared to $30.6 billion in 2004. Same-store sales for the year increased 6.5 percent, while pharmacy same-store sales increased 7.0 percent and front-end same-store sales increased 5.5 percent.
Total pharmacy sales represented 68.8 percent and 70.2 percent of total company sales for the quarter and year respectively. Third-party prescription sales were 94 percent of pharmacy sales for the quarter, and 94.1 percent for the year. Same-store sales exclude stores that remain closed as a result of hurricanes Katrina and Rita.
“The year 2005 will be remembered as one of considerable accomplishment for our company,” stated Tom Ryan, chairman of the board, president and chief executive officer. “We completed the integration of approximately 1,100 stores acquired in 2004 and opened nearly 300 new or relocated CVS/pharmacy stores. … Our progress on the turnaround of those acquired stores has exceeded our expectations.”
By mid-2006, CVS expects to complete the recently announced acquisition of 700 Sav-on and Osco drugstores from Albertson’s. That transaction gives CVS a considerable presence in southern California, the Southwest and Midwest.
“The deal will enhance our long-term growth, and is expected to be accretive to earnings and cash flow in its first full year,” Ryan said. “At the same time, we will continue our organic store growth program, with plans to open 250 to 275 new or relocated stores throughout 2006.”
For the year, CVS opened 166 new stores, closed 70 stores and relocated 131 others. As of December 31, 2005, CVS operated 5,471 retail and specialty pharmacy stores in 37 states and the District of Columbia.
CVS also reported on Thursday that January revenues increased 7.9 percent to $3.0 billion, compared to $2.7 billion in the prior year period. January same-store sales rose 5.4 percent, while pharmacy same-store sales increased 4.8 percent and front-end same-store sales increased 6.7 percent.
