Part I Introduction and Financial Analysis
Both CVS Corporation and Walgreen Company operate retail drug stores in the United States. In addition to having pharmacies and selling prescription and non-prescription drugs both retailers also sell general merchandise. This includes items like beauty and cosmetic products, convenience foods, household items and film & photofinishing services.
Walgreens is the more established and older of the two companies. It was founded in 1901 and until recently it added stores from mostly internal organic growth. CVS is the newer company and started in 1963. The majority of growth at CVS has come from acquisitions of other companies like Revco, Arbor Drug, Eckerd and more recently Sav-On and Osco Drug Stores. Walgreens and CVS operate more than 5,000 chain stores each throughout the United States over 5,200 retail outlets each.
The major income statement changes for Walgreens the past two years are in the following areas. Net sales increased nearly $5 billion dollars from $37.5 billion in 2004FY to $42.2 billion in 2005FY while net income increased from $1.35 billion to $1.56 billion within the same period. It should be noted from Walgreens income statements the cost of sales increased 11% from $27.31 billion (2004FY) to $30.41 billion (2005FY). Selling general & administrative expenses rose from $8.06 billion in 2004FY to $9.36 billion in 2005FY.
On their balance sheet Walgreens showed an increase of assets in the following areas. Net property and equipment went from $5.45 billion in 2004FY to $6.17 billion in 2005FY a 13% jump. Inv ...