Maverick Capital and Walgreen
Maverick Capital added new positions in CBS Corp. (CBS), Alibaba Group (BABA), and 21st Century Fox (FOXA). The fund’s top exits were Ralph Lauren Corp. (RL), Walgreen’s (WAG), and Ctrip.com (CTRP). The fund added to its stakes in Qihoo 360 Technology (QIHU), FleetCor Technologies (FLT), and AbbVie Inc. (ABBV). Its top stake decreases were in Baidu, Inc. (BIDU) and TransDigm Group (TDG).
Maverick Capital closed its position in WAG in 3Q14. The position accounted for 1.40% of the fund’s total portfolio in 2Q14.
WAG is the largest drug retailing chain in the US. As of May 31, 2014, the company operated 8,217 stores in 50 US states, the District of Columbia, Puerto Rico, and the US Virgin Islands. WAG was founded in 1901 in Chicago, Illinois. Its headquarters are in the Chicago suburb of Deerfield, Illinois.
4Q14 results in line with estimates
In the fourth quarter, WAG’s sales increased 6.2%—compared to $19.1 billion in the same quarter last year. Sales for fiscal year 2014 increased 5.8% to a record $76.4 billion. Front-end comparable store sales, or those open at least one year, increased 1.3% in the fourth quarter—compared to the same quarter last year. Customer traffic in comparable stores decreased 2.2%. The basket size increased 3.5%.
Prescription sales represented 65.7% of sales in the quarter. They increased 9.3%—compared to the same quarter last year. In comparable stores, prescription sales increased 7.8%.
In fiscal year 2014, WAG filled a record 856 million prescriptions. The company continued to see strong growth in prescriptions filled for Medicare Part D patients. The prescriptions increased 9.2% in the fourth quarter—compared to the same quarter last year. Since the beginning of fiscal year 2013, WAG’s Medicare Part D prescription market share grew more than twice as fast as its overall retail prescription market share.
Net loss in accordance with GAAP (generally accepted accounting principles) was $239 million in 4Q14—compared to net earnings of $657 million in the same quarter last year. The decrease was due to the acquisition of Alliance Boots.
WAG completes second step in the acquisition of Alliance Boots
In August, WAG exercised its option to complete the second step of its strategic transaction with Alliance Boots ahead of the original option period. The original period was between February and August 2015. The transaction is subject to shareholder and other regulatory approvals. It will combine the two companies to form the first global pharmacy-led health and well-being enterprise.
The next part of this series will explain Maverick Capital’s sold position in Ctrip.com.