Walgreen Co. (NYSE: WAG) posted a 19.6 percent rise in quarterly profit on Monday driven by strong growth in its prescription sales.

The Deerfield, Illinois-based company posted third quarter net income of $561 million or 56 per share, compared to $469 million or 46 per share same quarter last year.

Sales came in at a record $13.7 billion, a 12.5 percent increase over the same quarter last year.

Analysts polled by Thomson Financial were looking for average earnings of 54 cents a share on revenue of $13.79 billion.

Profit growth was helped by an inventory credit of $3.5 million due to less inflation than anticipated among pharmacy inventories.

Prescription sales rose 13.8 percent overall and rose 9 percent in comparable stores. Prescription sales, accounted for 65.9 percent of total sales in the quarter, it said.

The company's total revenue in comparable drugstores was up 7.8 percent in the third quarter of fiscal 2007, while front-end comparable drugstore sales increased 5.6 percent.

We're now in our fourth consecutive year of front-end comparable store sales increases in excess of 5 percent. Gregory Wasson, President of Walgreen, stated. Our store locations prove their worth every day by attracting customers looking for a convenient place to shop.

Walgreen's plans to open 500 stores this fiscal year and 500 more next year.

It operated 5,751 stores as of May 31, up from 5,251 a year earlier.

Shares of the firm fell 72 cents, or 1.6 percent to close at $44.25 on the New York Stock Exchange.