Walgreen to report Q3 numbers: What should we look for?

Another cool thing about analyst expectations is that, while Wall Street believes that Walgreen's per-share profit will drop, it doesn't think that income will fall off the cliff. Last year at this time, Walgreen reported $0.58 per share.

The big thing I'll be looking at is same-store sales. And then, as always, I'll want to know how the non-pharmacy items are doing. When you go into a Walgreen location, you don't just have to head to the pharmacy section to pick up a refill. There are all kinds of departments for you to peruse. Ultimately, Walgreen wants to grab your attention and show you all the other stuff you could pick up on your journey for a bottle of a broad-spectrum antibiotic.

Walgreen could probably do better in terms of promoting its non-pharmacy products. Personally, I tend to shop at CVS. I find that the company does a better job of marketing and merchandising. Of course, if you peruse that Q2 press release I linked to above, you'll note that Walgreen management seems mostly concerned with protecting the gross margin. Rethinking its marketing paradigm probably isn't up there on the list of things to do. There's a reason for this: the economic downturn is still with us, and management wants to cut costs wherever possible.

Restructuring is fine, but I think so many retail companies forget that branding is of prime importance. I'd be shocked if we don't read more of the same come Monday: updates on restructuring initiatives, not a whole heck of a lot on how to improve brand equity. So, because of that, I hope we'll see a nice performance in terms of gross profit. By the way, Walgreen calls its restructuring scheme "Rewiring for Growth." Don't you just love these kinds of code names for internal corporate projects? Finally, shareholders should pay attention to guidance and thoughts on future expansion plans. The latter is definitely something to consider, since an appropriate retail footprint across the country should serve the stock well once the recovery truly arrives.

Walgreen's shares probably will see a bid if the bottom line is beat. Again, I'm leaning toward a belief that Walgreen will do fine on this count. I wouldn't be a buyer on Monday, though; whether the stock goes up or down, I'd rather wait to see how the chart develops after the report is out.

Disclosure: I don't own any company mentioned; positions can change without notice.