CHICAGO — Drugstore Walgreen Co. said yesterday that an increase in prescription sales, especially among profitable generic medications, helped its third-quarter profit climb nearly 20 percent.

The nation's biggest pharmacy chain by revenue — which plans to enter the Hawai'i market and go head-to-head with Longs Drug Stores Corp. — reported a profit of $561.2 million, or 56 cents per share, in the quarter that ended May 31. During the same period last year, the Deerfield-based company posted earnings of $469.2 million, or 46 cents per share.

Meanwhile, the company said that it added 129 new stores during the quarter, and was on pace to open nearly 500 stores during the 2007 fiscal year.

"During the past quarter, our main focus — and biggest opportunity — continued to be drugstore expansion," said Rick Hans, the company's director of finance. "This will drive our company's growth well into the future."

At the end of the quarter, Walgreen operated 5,751 drugstores in 48 states and Puerto Rico.

Hawai'i and Alaska are the only two states where Walgreen currently does not have a store. And Hawai'i is the last of the biggest 100 U.S. markets with only one major drugstore chain, according to Robert Roscoe, Walgreens director of asset development, who said recently that Longs has a 73 percent share of the business in the Islands.

Walgreens has said it plans to open its initial four stores on O'ahu by early next year. At least two of the initial Walgreens stores — one at the former Star Market in Kane'ohe and one at the former Kam Bowl in Kalihi —will be Longs neighbors.

Walgreen's revenue climbed nearly 13 percent to $13.7 billion from $12.2 billion last year, but fell short of Wall Street forecasts.

Analysts polled by Thomson Financial expected a profit of 54 cents on revenue of about $13.8 billion.

The retailer's results were boosted by at least $17 million in one-time credits, which analysts at Morgan Stanley said accounted for a 3 cent-per-share gain.

The company didn't break out the earnings-per-share impact of the gains it received from the credits. Thomson estimates typically exclude such one-time items.

Goldman Sachs analyst John Heinbockel said the company's latest performance was "solid."

"How good was the 3Q? Pretty solid, although certainly not to the extent as the two prior quarters," he wrote in a research note.

Same-store sales, which measure sales in stores open at least one year, rose 7.8 percent during the quarter. Non-pharmacy, same-store sales climbed 5.6 percent.

Same-store sales are considered to be an important measurement of retail performance because it tracks growth from established stores rather than growth from newly opened ones.

Prescription sales, which accounted for 65.9 percent of the quarter's total sales, grew 13.8 percent.

The growth comes while pharmacy companies face mounting pressure from discount retailers, such as Wal-Mart Stores Inc., which are offering medicines at deeply discounted prices.

To compete, Walgreens has acquired some smaller, independent pharmacies, while ramping up the number of in-store health clinics.

Thanks to its May acquisition of Take Care Health Systems, Walgreen expects to have 400 such clinics in operation by the end of next year.

"Walgreen also appears to be entering higher investment cycle," Bear Stearns analyst Robert Summers wrote in a research note. "Rapidly adding retail health clinics, recently opened distribution center, and continued high unit expansion all contribute to higher expense structure and absorb some of gross margin gains."

Walgreen shares fell 72 cents, or 1.6 percent, to close at $44.26 yesterday.