Thu Jan 31, 2013 1:19pm EST

n">(Reuters) - The unrelenting drought gripping key farming states in the U.S. Plains shows no signs of abating, and it will take a deluge of snow or rain to restore critical moisture to farmland before spring planting of new crops, a climate expert said on Thursday.

"It's not a pretty picture," said climatologist Mark Svoboda of the University of Nebraska's Drought Mitigation Center.

Precipitation in the Plains region has been 3-6 inches shy of normal levels since October, and some areas are nearly 16 inches short of much-needed moisture over the last nine months, said Svoboda.

The drought that last year ranked as the worst in roughly 50 years is still entrenched in the nation's mid-section. This month was considered the worst January in terms of drought over the 13 years that a consortium of federal and state climatology experts have been monitoring drought levels and issuing regular "Drought Monitor" reports, said Svoboda.

"The January number is the highest amount of coverage for the U.S. since we've been doing this," Svoboda said.

Thursday's Drought Monitor report showed severe drought still gripping 87.25 percent of the High Plains, unchanged from the prior week. Fully 100 percent of the land area in Kansas, Colorado, Nebraska and Oklahoma remained engulfed in severe drought or worse, according to the Drought Monitor.

Nebraska remained the most drought-stricken state, with 96.28 percent in extreme drought - the second-worst level of drought - and 77.46 percent in exceptional drought, considered the most dire.

The Plains states are key crop production areas, particularly for hard red winter wheat, an important bread-making crop. And they are critical areas for cattle and other livestock production.

Overall, 57.68 percent of the contiguous United States was in at least "moderate" drought as of January 29, a slightly worse situation than the previous week's tally of 57.64 percent. Exceptional drought expanded slightly to 6.37 percent, up from 6.36 percent of the country.

Millions of acres from South Dakota to Oklahoma and west into Wyoming, Colorado and New Mexico and east into Missouri and Arkansas, are short more than half of the normal moisture they receive, said Svoboda.

The dry conditions have been exacerbated by unseasonably warm conditions in many areas.

The U.S. winter wheat crop that was planted last fall is struggling for survival now as a result, and will need substantial moisture to emerge in the spring.

Corn and soybeans crops, generally planting in April or shortly after, will also need good soil moisture to get the plants off to a healthy start before summer sets in. But there are no signs of any significant weather pattern shifts to bring about heavy precipitation, said Svoboda.

"Instead of normal, we'd like to see 150 percent of normal," he said.

(Reporting by Carey Gillam in Kansas City; Editing by David Gregorio)

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Fri Dec 21, 2012 12:24pm EST

n">(Reuters) - Walgreen Co (WAG.N) posted an unexpected decline in quarterly profit on Friday as the largest U.S. drugstore chain worked on winning back former customers and changed how it accounts for its first international acquisition.

The company stands to get a bit of a sales lift in the current quarter as a strong flu season brings shoppers in for flu shots and medications.

Walgreen lost millions of customers due to a contract dispute with pharmacy benefits manager Express Scripts Holding Co (ESRX.O) and is trying to lure them back with offers such as $25 gift cards. It is seeing an increasing pace of Express Scripts patients returning to its stores.

Earnings in the latest quarter were hurt by a decision to report results from Walgreen's stake in Europe's Alliance Boots Holding Ltd ABN.UL on a one-quarter lag rather than a one-month lag. The decision was based on regulatory, audit and business concerns, the company said.

Shares of Walgreen, which has 8,000 U.S. drugstores, fell 3.75 percent to $36.14 in midday trading.

"It was messy," Gabelli & Co research analyst Jeff Jonas said of the quarterly results, noting they included items such as the change in reporting results from Alliance Boots as well as a charge for costs stemming from Hurricane Sandy.

"If you give them credit for everything, it was actually a good quarter," he said.

FLU UP, PROFIT DOWN

The Centers For Disease Control is projecting the worst flu season in 10 years, and Walgreen has seen strong demand for flu shots and other immunizations continue into December, Chief Executive Greg Wasson said.

Through the end of its fiscal first quarter on November 30, Walgreen had given more than 5 million flu shots, up from a year earlier. It has also seen sales of cough and cold medications pick up.

A strong flu season should help the industry in December and likely for the next couple of months, said Jonas.

Walgreen earned $413 million, or 43 cents per share, in the first quarter, down from $554 million, or 63 cents per share, a year earlier.

Earnings before unusual items fell to 58 cents per share from 71 cents a year earlier, missing analysts' average forecast of 70 cents, according to Thomson Reuters I/B/E/S.

Unusual items in the latest quarter included costs related to acquisitions, an inventory provision, and the effects of Hurricane Sandy.

Results from Alliance Boots cut adjusted earnings per share by 7 cents, rather than adding 3 cents as was expected if results had been reported using a one-month lag.

Walgreen paid $7 billion in cash and stock for a 45 percent stake in the European pharmacy operator in August and has an option to buy the rest of the company in about three years.

Walgreen's first-quarter sales fell 4.6 percent to $17.32 billion, with sales at stores open at least a year, or same-store sales, down 8 percent.

The sales performance was slightly worse than Walgreen reported earlier this month. At that time, it said sales fell 4.5 percent to $17.34 billion and same-store sales declined 7.7 percent.

Since settling its dispute with Express Scripts, Walgreen has stepped up its marketing to bring back Express Scripts patients and also has been promoting a new loyalty card, signing up more than 45 million shoppers in a few months.

Rivals CVS Caremark Corp (CVS.N) and Rite Aid Corp (RAD.N) are trying to hold onto the customers they gained when Walgreen lost its Express Scripts patients.

On December 13, CVS said it still expected to retain at least 60 percent of the Walgreen patrons that switched to its chain, which should boost CVS' fourth-quarter earnings by at least 12.5 cents per share.

On Thursday, Rite Aid said it has retained "the lion's share" of patients it gained during the dispute.

(Reporting by Jessica Wohl in Chicago; Editing by Jeffrey Benkoe and John Wallace)

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