CVS Sets Record Q1 Sales

WOONSOCKET, RI-The takeover of a competing drug store chain, a busy flu season and an early Easter helped set record first quarter sales and earnings for pharmacy giant CVS (NYSE:CVS), the company reported.

“The first quarter of 2005 was one of great accomplishment,” Thomas Ryan, chairman, president, and chief executive officer of CVS Corp. said in announcing a net earnings increase of 18.4%, or $289.7 million for the quarter ending April 2, 2005. Net sales during the period also rose significantly, growing 34.7% to $9.18 billion, the company said.

Not included in those figures were sales at Eckerd Drug Stores, which was purchased by CVS last year for $4.5 billion. Since buying the financially troubled chain, CVS has closed 167 of the 1,268 Eckerd stores it purchased and plans another seven closings this year. Meanwhile the company began renovating failed chain’s remaining outlets.

“The Eckerd stores were in deep decline when we bought them,” said David Rickard, CVS vice president and chief financial officer. “Today they are growing.”

The acquisition, along with a busy flu season and an early Easter, helped boost the bottom line for CVS, which reported strong earnings in both front end and pharmacy sales throughout the company.

“In the pharmacy, capturing share remains an important part of our long-term success,” said Rickard, noting that in markets where CVS has a presence, one out of five prescriptions are filled at a CVS store.

The Woonsocket, RI-based company also reported strong sales in its emerging markets of Phoenix, Tucson, Los Angeles, Chicago, Minneapolis and Orange County with front end, pharmacy and prescription volumes tracking ahead of schedule, Rickard said.

The firm s PharmaCare EHS business, a mail order and pharmacy benefit management component, also saw its first quarter sales expand, growing by 105% while operating profits increased 106%.Rickard said CVS started off the quarter with strong growth by opening 96 stores, nearly one every day, with many of those stores in Florida and Texas, states that the 5,000 store chain sees as major growth areas. The chain also plans to open plans 275 to 300 stores during the remainder of the year, 175 of them new and the rest relocations, he said.