The Slowcook at Spydog Farm The Slowcook at Spydog Farm

News Flash: Corporate America Doing Just Fine

December 18th, 2010 · 1 Comment · Posted in Blog

Drug store business never better

Like a lot of Americans, The Slow Cook owns some stock. A good chunk of our retirement portfolio is invested in dividend reinvestment plans. These are company-sponsored vehicles that allow you to buy as few as one share, then treat them like a bank account with an option to have all dividends reinvested automatically in more stock. One of the stalwarts is Walgreens, a Chicago-based drug store chain that did very well for my grandmother and now is doing very well for us.

When the annual reports for these companies arrive in the mail, I like to look at the message from the CEO to get a sense of how business has been going. Then I flip to the cash flow statement to see how the rhetoric translates into hard figures.

I don’t normally talk about money matters here. But I couldn’t help being struck by the news that while millions of Americans may be out of work, food stamp applications breaking all records, food pantries swamped, business at Walgreens is humming right along. Take a listen:

“Fiscal 2010 was a year of substantial progress in the transformation of Walgreens as the Company marked 36 consecutive years of record sales,” write Alan G. McNally, chairman of the board, and Gregory D. Wasson, president and CEO. “Despite a continuing weak economy, we achieved strong growth, controlled our costs and created new and innovative ways to better serve customers and patients in the communities where they live and work.”

Walgreens recorded net sales of $67.4 billion, a 6.4 percent increase over the year before. Gross profit dollars grew by $1.4 billion. Earnings per share increased 5 percent to $2.12, and in the fourth quarter of the year earnings per share increased 11.4 percent compared to the same period a year earlier.

The company recorded $3.7 billion in cash flow from operations and a record $2.7 billion in free cash flow, which enabled Walgreens to return a record $2.2 billion to shareholders through dividends and share repurchases, including a dividend increase of more than 27 percent.

“This represented the 35th consecutive year that Walgreens has increased its dividend, and over the past eight years the Company’s dividend has grown at a compound annual growth rate of nearly 22 percent.”

Apparently, what was true before is more true than ever: It’s much more lucrative to be a shareholder in the American economy than an actual worker in the American economy.

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  • Sophia Katt

    I rarely recommend the corporate annual report as the ideal source for the kind of conclusions you are making. Try the 10K report the company is required to file with the SEC. A bit more objectivity there.

    Cheers!