Walgreen Co., the largest U.S. drugstore chain, posted a 25 percent rise in quarterly profit on Monday, driven by strong sales of prescription medications and the addition of the Happy Harry's chain.

Profit increased to $412.3 million, or 41 cents per share for the fiscal fourth quarter ended August 31, from $329 million, or 32 cents a share, a year earlier. Analysts, on average, expected a profit of 41 cents, according to Reuters Estimates.

Sales climbed 16 percent to $12.17 billion.

Same-store sales, or sales at stores open more than a year, rose 9.7 percent. Prescription sales in comparable drugstores rose 12.3 percent, while comparable sales of general merchandise rose 5.2 percent.

Deerfield, Illinois-based Walgreen typically adds to its chain by opening new stores, but earlier this year it bought 76 Happy Harry's stores, its largest acquisition in 20 years, and said it would consider more. The July acquisition of Happy Harry's came a month after rival CVS Corp. bought 701 Sav-on and Osco drugstores from Albertsons Inc.

Walgreen added 476 stores in fiscal 2006, bringing its total to 5,461 stores. The company expects to add more than 400 stores in the current fiscal year and still aims to have 7,000 stores in 2010.

Walgreen reiterated that it does not expect Wal-Mart Stores Inc.'s new $4 generic drug plan to have a significant impact on its business. The Wal-Mart plan covers 291 drugs, while Walgreen pharmacies stock about 1,800 generic drugs.

The latest quarter included $18.8 million in pretax employee stock option expenses and $7.3 million in pretax litigation gains, while results from a year earlier included $54.7 million in expenses related to Hurricane Katrina damage.

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