"We are very pleased with the outcome of this mutual, multi-year agreement that met our business objectives," said Kermit R. Crawford, Walgreens executive vice president of pharmacy. "The agreement is good for our patients, pharmacists and shareholders and will allow us to continue to meet the needs of our customers across the country through the CVS Caremark network. As a result of the agreement, we look forward to building a mutually beneficial relationship with CVS Caremark going forward."

Core Strategies and Milestones

Walgreens continues executing its three core growth strategies - to leverage the best store network in America, enhance the customer experience and drive cost reductions and productivity gains.

In April, Walgreens completed its acquisition of 258 Duane Reade stores across the New York metropolitan area, providing it with a leading market position in the nation's largest drugstore market. The integration of Duane Reade is on track and the company is pleased with the especially strong performance by its new and renovated stores. Walgreens anticipates generating $120-$130 million in synergies from the acquisition over the next three years. The company filled a record 198 million prescriptions in the third quarter and is positioned to help patients, employers and other payers reduce health care costs beyond the cost of prescriptions. "With the passage of health care reform, we have the assets to provide holistic solutions to employers' health care needs," said Wasson. "For consumers, we are planning another comprehensive flu shot program this fall, as one example of our expanded vaccination and immunization program." Walgreens CCR initiative has now been rolled out to more than 1,200 stores nationwide, an increase of more than 500 stores since the end of the second quarter. The time needed to convert a store to CCR format is currently 20 percent less than earlier conversions. When fully implemented, CCR is expected to improve sales, reduce working capital and store labor, and improve the overall shopping experience. "Our customers are reacting favorably to the improvements we are introducing through CCR, as well as to our decision to introduce beer and wine, which are now available in nearly 3,600 of our stores," said Wasson. The company's cost reduction efforts continue to focus on reducing overhead through its Rewiring for Growth initiative, which is on target for net pre-tax savings of $500 million this fiscal year and $1 billion in annual savings beginning in fiscal 2011.

In the quarter, the company opened 94 drugstores and acquired 258 Duane Reade drugstores and nine other drugstores (a net gain of 342 after relocations and closings) compared with 202 (or a net gain of 179) in the year ago quarter. Walgreens expects organic store growth of between 4.5 and 5 percent in fiscal 2010 and between 2.5 and 3 percent annually beginning in 2011.

As of May 31, 2010, Walgreens operated 8,019 locations in all 50 states, the District of Columbia, Puerto Rico and Guam. The company has 7,522 drugstores nationally, including 117 hospital on-site pharmacies. Walgreens also operates worksite health centers, home care facilities and specialty and mail service pharmacies. Its Take Care Health Systems subsidiary manages more than 700 in-store convenient care clinics and worksite health and wellness centers.

SOURCE Walgreens