UPDATE 1-Walgreen profit beats estimates as generic drug sales rise
* Fourth-quarter earnings $0.73/share vs est $0.72
* Sales rise 5.1 pct to $17.94 bln
* Shares up 2 pct premarket
Oct 1 (Reuters) - Walgreen Co, the largest U.S. drugstore operator, reported a better-than-expected quarterly profit due to strong sales of higher-margin generic drugs, sending the company's shares up 2 percent in premarket trading.
Sales at stores open for more than a year rose 4.6 percent in the fourth quarter ended Aug. 31, but traffic at the stores fell 1.9 percent.
A rise in sales of generic drugs boosted the company's margins, mitigating the negative impact of lower spending by customers on non-essential items.
"The growth in GAAP margins was driven by an increase in generic prescription drugs dispensed, while front-end margins slightly declined," the company said in a statement.
Gross margins rose to 28.9 percent from 28.3 percent a year earlier as the company filled 8.2 percent more prescriptions.
Walgreen's net income increased to $657 million, or 69 cents per share, in the quarter from $353 million, or 39 cents per share, a year earlier.
Excluding items, the company earned 73 cents per share.
Walgreen's acquisition of a 45 percent stake in Alliance Boots Holdings Ltd last year added 8 cents to adjusted earnings, the company said.
Sales rose 5.1 percent to $17.94 billion.
Prescription sales, which accounted for about 64 percent of total sales, rose 6.1 percent. These sales at comparable stores rose 6.4 percent.
The company said it filled 203 million prescriptions in the quarter.
Analysts on average were expecting fourth-quarter earnings of 72 cents per share on revenue of $17.95 billion, according to Thomson Reuters I/B/E/S.
Walgreen shares were trading at $54.75. The stock closed at $53.80 on the New York Stock Exchange on Monday.