Walgreen's 1Q profit jumps 5%, Drugstore chain credits strong demand for prescriptions and growing sales of generic drugs.

CHICAGO (Reuters) - Drugstore chain Walgreen Co. said Tuesday that quarterly profit increased 5 percent, helped by strong demand for prescriptions and growing sales of higher-margin generic drugs.
Shares of Walgreen (Research), which has fueled growth with an aggressive store expansion program, rose nearly 2 percent in pre-market trade from Friday's close of $44.26 on the New York Stock Exchange.
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The retailer, which operates more than 5,000 stores, said profit rose to $345.6 million, or 34 cents per share, in the fiscal first quarter ended Nov. 30, from $328.6 million, or 32 cents, a year earlier. Earnings in the most recent quarter were cut by two cents by employee stock option expenses.
Analysts, on average, expected earnings of 35 cents before stock option expenses, according to Reuters Estimates.
Sales jumped 10.2 percent to $10.9 billion. Sales at stores open at least a year, a key measure for a retailer, rose 7.2 percent.
Prescription sales, which accounted for 65 percent of sales in the quarter, climbed 10.3 percent. At stores open at least a year, sales rose 7.7 percent, while the number of prescriptions filled increased 5 percent.
Walgreen, which operated 5,068 stores as of Nov. 30, plans to open 475 new stores in fiscal 2006 and opened or acquired 127 new stores in the first quarter.
The company competes with an increasingly powerful rival in CVS Corp. (Research), which acquired 1,200 Eckerd drugstores in 2004 and tried to buy more from grocer Albertsons Inc. (Research) before talks broke down in December.
Both Walgreen and CVS have staked a claim to the title of largest U.S. drugstore chain -- CVS has more stores, while Walgreen has higher revenue.
Walgreen's shares trade at about 25.3 times estimated fiscal 2006 earnings, compared with a multiple of 19.3 for CVS.