UFCW 324 Communications / News
CVS Raises Earnings and Sales Expectations
August 3, 2006 · Reuters
CVS Corp. the No. 2 U.S. drugstore chain, raised its full-year earnings forecast on Thursday, citing stronger-than-expected sales growth.
During a conference call, Chief Financial Officer David Rickard said that sales in the current third quarter were "off to a great start" and that same-store sales should rise 6 percent to 8 percent in the quarter.
Rickard said, as he has before, that the consumer slowdown that has been discussed elsewhere does not seem to have affected CVS. Consumers often curb spending to offset the impact of higher gasoline costs. But stores like CVS tend to benefit at such times, since shoppers will take a quick trip to a local store rather than driving further to a larger store.
CVS now expects to earn $1.47 to $1.51 per share this year, up from a previous forecast of $1.43 to $1.49 per share, including the impact of the June acquisition of 701 Sav-On and Osco drugstores from Albertsons Inc., Rickard said.
CVS expects another 8.5 cents to 10.5 cents of dilution from the integration of the Sav-On and Osco stores this year, more heavily weighted to the third quarter.
Rickard also gave initial third-quarter earnings guidance, calling for a profit of 28 cents to 30 cents per share.
Including the recently acquired stores, CVS expects total revenue to rise by about 17 percent to 18.5 percent this year. Rickard said same-store sales should rise 6 percent to 7.5 percent this year. In May, CVS forecast full-year same-store sales growth of 5 percent to 7 percent.
Rickard also said that CVS still plans to open 100 to 125 net new stores this year, factoring in relocations and some store closures.
Earlier on Thursday, CVS posted a second-quarter profit of 40 cents per share, which met the high end of its expectations and topped analysts' average forecast of 37 cents per share.