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To: 2MAR$ who wrote (17720)	9/21/2001 6:02:08 PM
From: 2MAR$	Read Replies (1) \| Respond to of 208838

CVS cuts Q3 profit outlook, cites attacks (Updates with closing share prices) By Ellis Mnyandu NEW YORK, Sept 21 (Reuters) - Drugstore chain CVS Corp. <CVS.N> on Friday lowered its third-quarter earnings outlook and its shares fell to a new 52-week low as the company forecast weak sales amid waning consumer confidence after the Sept. 11 attacks on New York and Washington. The warning came four days after Duane Reade Inc. <DRD.N>, the largest drugstore chain in the New York City area, warned quarterly earnings will decline more than previously forecast after a store at the World Trade Center was destroyed and 10 percent of its other outlets were forced to close temporarily. Woonsocket, Rhode Island-based CVS, which ranks behind the nation's No. 1 drugstore chain, Walgreen Co. <WAG.N>, said it expects to earn 30 cents to 32 cents per diluted share in the quarter. CVS, which in June reported that a shortage of pharmacists was denting sales growth, had previously expected earnings for the quarter of 35 cents to 37 cents per share. Analysts polled by Thomson Financial/First Call on average had expected CVS to post a third-quarter profit of 35 cents a share. First Call estimates ranged from 32 cents to 36 cents a share. CVS shares closed down 8.77 percent, or $3.10, at $32.25 on the New York Stock Exchange on Friday. The stock -- which so far this year is off 45 percent compared with a 30 percent drop in the Standard & Poor's Retail Drug Index <.SPETR> -- had earlier slumped to a 52-week low of $30.50 from a previous low of $34.75. While CVS cited the impact of Sept. 11 attacks on its sales and earnings outlook, one analyst said the company's warning may be as a result of business execution failures inside CVS. SOUND INDUSTRY PROSPECTS The analyst said he expects CVS shares to stay under pressure in the short term, although the prospects for the rest of the U.S. drug retailing industry remained sound. "Certainly the turning point for CVS was when they revealed that they had a pharmacist shortage," said Richard Hastings, an analyst at CyberBusinessCredit.com, a credit rating firm. "It is possible that there's something wrong with CVS product assortments and product lines. I think the problems are internal," said Hastings, adding "the resurgence of Rite Aid Corp. <RAD.N> is also raising competition for CVS." CVS, which operates more than 4,100 stores, said its sales growth for stores open at least one year is running at eight percent for the quarter, below its previously forecast growth of 9 percent to 10 percent. "While early September showed signs of improvement, last week's national tragedy and its effect on consumer confidence are expected to have a negative impact on September sales," CVS said in a statement. By contrast, Hastings said, Walgreen "had not lost a beat" because consumers had to buy medicines, even if the economy was weak or there was talk of war. A Walgreen spokesman said while the chain had suffered a temporary dip in sales in the few days following the attacks on New York and Washington, it remained upbeat about achieving strong revenues from the remainder of the year. "We did see a temporary drop in sales after the attack, but we are still positive about the upcoming Halloween and Christmas selling periods," Michael Polzin said. He could not give further details. Walgreen is scheduled to report fiscal fourth-quarter results on Oct. 1. Walgreen shares finished down 25 cents or 0.78 percent at $31.80, while those of Duane Reade ended off 9.3 percent or 2.79 percent at $27.21. ((--Ellis Mnyandu, New York Equities Desk (646) 223 6085, ellis.mnyandu@reuters.com)) REUTERS * end of story *