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CVS warns on 4Q
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October 30, 2001: 9:06 a.m. ET
No. 2 drugstore chain hits lowered 3Q mark, will close 200 stores.
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NEW YORK (CNNmoney) - CVS Corp., the nation's No. 2 drugstore chain, reported a drop in third-quarter earnings in line with analysts' lowered forecasts, warned on fourth-quarter results and said it will close about 200 stores and make other restructuring moves.
Rhode Island-based CVS -- which ranks behind industry leader Walgreen Co. (WAG: Research, Estimates) in terms of revenue -- reported net income of $123.7 million, or 30 cents a diluted share excluding special items, for the period ended Sept. 29. That's at the lower end of its previous earnings guidance and 16 percent below the $147.2 million, or 36 cents a diluted share, it earned on the same basis a year earlier.
Analysts surveyed by earnings tracker First Call had forecast 30 cents a share for the period, but they expected EPS of 35 cents a share before a Sept. 21 warning.
The company said it now expects fourth-quarter earnings per share of 23 to 28 cents, excluding special charges. That's down from 51 cents a share earned a year earlier and well below the 49 cent First Call forecast.
The company said fourth-quarter revenue should rise 8 to 9 percent from year-earlier results, which would put full-year revenue at $22.2 billion to $22.3 billion, just below the First Call forecast of $22.4 billion but up from 2000 sales of $20.1 billion.
The company said it will take restructuring charges of about $350 million, or 56 cents a share, in the fourth quarter for closing 200 stores, 10 distribution facilities and other operations. The company did not detail the number of employees affected by the closures, which are expected in the first quarter of 2002.
Sales rose 10 percent to $5.4 billion from $4.9 billion, while sales at stores open at least a year - a closely watched retail measure known as same-store sales - gained 7.6 percent. Same-store prescription sales rose 11.8 percent, while front-end same-store sales were basically flat.
Shares of CVS (CVS: Research, Estimates) lost 38 cents to $31.62 Monday ahead of Tuesday's report. 
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