Originally created 05/06/04

CVS reports first quarter profits increase by nearly 25 percent



PROVIDENCE, R.I. -- CVS Corp. reported first quarter profits on Wednesday nearly 25 percent higher than in the same period last year, boosted by sales of pharmacy products and goods at established stores.

The drug store operator reported a profit of $244.6 million, or 59 cents a share, in the three months ended ended April 3, up from $196.3 million, or 48 cents a share, in 2003.

Revenues at the Woonsocket-based company rose to $6.82 billion from $6.31 billion reported during the same period in 2003.

"I am very pleased with our first quarter results, which reflect healthy sales growth in both our pharmacy and front-end businesses, and significant gross margin improvement," said Tom Ryan, CVS's chairman, president, and chief executive. "The improvement in our gross margin was driven by an increase in generic drug sales, a continued decrease in inventory losses, and a more profitable promotional product mix.

Sales at stores open at least a year rose 6.4 percent for the period, while pharmacy same store sales increased 8.3 percent, the company said.

Last month, CVS announced it would purchase 1,260 stores in the Eckerd drug chain, mostly stores in the southern United States. The company said Wednesday it expects to close the deal in June. The deal is subject to review by federal regulators.

The chain opened 29 new stores, closed 21 and relocated 17 others. As of April 3, CVS operated 4,187 retail and specialty pharmacy stores in 32 states and the District of Columbia.