Should You Worry About the Walgreen Company (WAG) Earnings Miss?

Senior executives at Walgreen are very excited about the potential to use the loyalty program to drive higher front-end sales going forward. For the past year, the loyalty program has been a drag on earnings, due to the necessary IT investments, and the labor involved in signing up 75 million customers.

However, the data generated by loyalty card use is starting to give Walgreen insight into how to boost sales through targeted investments in marketing or promotions. Moreover, now that customers have had time to accumulate points, they will be receiving rewards that will drive additional store traffic.

Foolish bottom line
While Walgreen Company (NYSE:WAG) suffered a setback due to last year’s dispute with Express Scripts, the company is primed for a big-time comeback. The company already achieved record EPS this quarter. As more customers return from other pharmacies, Walgreen’s prescription growth should continue to outpace the industry’s. Moreover, a return to promotional initiatives, and the ramping up of the company’s new loyalty card, should start to drive significant front-end sales increases soon. As a result, Walgreen looks like an enticing investment opportunity after its recent pullback.

The article Should You Worry About the Walgreen Earnings Miss? originally appeared on Fool.com and is written by Adam Levine-Weinberg.

Fool contributor Adam Levine-Weinberg has the following options: Long Oct 2013 $2.5 Puts on Rite Aid. The Motley Fool recommends Express Scripts. The Motley Fool owns shares of Express Scripts.

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