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Walgreens Boots Alliance, Inc.
Oct 02,2000

Walgreen Co. Reports Record Fourth Quarter and
26th Consecutive Year of Record Sales, Earnings

Walgreen Co. Reports Record Fourth Quarter and 26th Consecutive Year of Record Sales, Earnings

Walgreen Co. Reports Record Fourth Quarter and 26th Consecutive Year of Record Sales, Earnings

DEERFIELD, Ill., Oct. 2, 2000 - Walgreen Co. (NYSE: WAG) today announced record sales and earnings for the fourth quarter and fiscal year 2000, ending Aug. 31. This marks 26 consecutive years of record results for the nation's largest drugstore chain, achieved during a year in which the 99-year-old company also opened a record 462 new stores. Net earnings for the fourth quarter were up 34.9 percent to $217 million or 21 cents per share (diluted), including a one-time gain of 2 cents per share for a partial payment of the company's share of the brand name prescription drug antitrust litigation settlement. Excluding the gain, earnings rose 22.0 percent to $196 million or 19 cents per share. Fiscal year net earnings increased 24.5 percent to $777 million or 76 cents per share (diluted), including the one-time gain noted above. Without the gain, fiscal year earnings rose 21.2 percent to $756 million or 74 cents per share. Sales rose 18.0 percent to $5.4 billion for the fourth quarter and 18.9 percent to $21.2 billion for the year. Total sales in comparable stores (those open more than a year) were up 10.8 percent for the quarter and 11.7 percent for the year. Prescriptions, which accounted for 55.2 percent of sales in fiscal 2000, climbed 24.2 percent in the fourth quarter and 25.3 percent for the fiscal year. Prescription sales in comparable stores rose 17.8 percent in the quarter and 19.0 percent for the year. Chairman Dan Jorndt noted the company's record results came during its 12th straight year of increased store openings, as the company opened a new store on average every 19 hours. "We continue to meet - and exceed -our expansion plans while also meeting earnings expectations," he said. "We plan to open 500 new stores in fiscal 2001."

One-third of Walgreens store base is less than three years old. While these stores initially pull down profitability, Jorndt noted, "This puts us in excellent position for future performance as these new stores establish themselves in the years ahead."

Walgreens also marked the opening of its 3,000th store in 2000, a goal the company first announced in 1991. It took Walgreens 83 years to open its 1,000th store, 10 years to open its 2,000th store and just six years to open its 3,000th. By 2010, the company plans to operate 6,000 stores nationwide.

Walgreens unprecedented growth during the last decade has reduced its average store age to less than six years. Today, nearly two-thirds of Walgreen stores have drive-thru pharmacies, and 67 percent are at convenient, freestanding locations.

A Decade of Growth Fiscal year: 1990 2000 Total stores 1,564 3,165 Freestanding stores 155 2,118 24-hour stores 55 690 1-hour photo stores 2 3,007 Drive-thru pharmacies 1 1,990

The company's aggressive growth also allows fixed costs to be spread over a larger store base. Selling, general and administration expenses dropped 25 basis points to 21.30 percent of sales in fiscal 2000, the sixth consecutive year these expenses fell.

President David Bernauer said capital expenditures are expected to reach $1.4 billion in fiscal 2001. "The bulk of those funds are targeted for store growth, distribution and technology," Bernauer said. "We have a new distribution center under construction in West Palm Beach, Fla., and two more will begin construction during this fiscal year - in the Dallas metro area and northern Ohio. We'll also expand one existing center in 2001."

Walgreens Internet pharmacy business continued to grow during the year. More than 90 percent of online pharmacy customers choose to pick up their prescriptions the same day at their local store, solidifying the importance of brick-and-mortar stores to the company's online offering. In late September, Walgreens added non-prescription items for sale on its Internet site.

At Aug. 31, Walgreens operated 3,165 drugstores in 43 states and Puerto Rico, versus 2,821 a year ago, for a net increase of 344.

For additional information on the quarter's results, investors can listen beginning about 9 a.m. eastern time today to a recorded Webcast discussion on Walgreens Investor Relations Web site at: http://investor.walgreens.com.

This news release may contain forward-looking statements that involve risks and uncertainties. The following factors could cause results to differ materially from management expectations as projected in such forward-looking statements: seasonal variations, competition, risks of new business areas, the availability and cost of real estate and construction, and changes in federal or state legislation or regulations. Investors are referred to the "Cautionary Note Regarding Forward-Looking Statements" in the Company's most recent Form 10-Q, which Note is incorporated into this news release by reference.

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