While aggressive discounting to lure holiday shoppers intensified retail competition in December, the chain drug industry emerged in reasonably good shape.


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Retail News Breaks

Drug chains turn in solid sales for 2013

January 20th, 2014

NEW YORK – While aggressive discounting to lure holiday shoppers intensified retail competition in December, the chain drug industry emerged in reasonably good shape.

And while politicians and economists continue debating the direction of the economy, there are signs that 2014 might in fact see a recovery take hold.

Total chain drug sales totaled $26.07 billion in December, a year-over-year increase of 4.7%. That brought the trade class’s top line for 2013 to $273.09 billion, up 4.4% over 2012’s total of $261.54 billion.

On a same-store sales basis, the performance was more muted, with December sales advancing 2.2%. For the year, though, same-store results rose 3.1%.

For Walgreen Co., 2013 ended on a resoundingly upbeat note, as total sales rose 7.2% to $7.2 billion, driven by a solid 6.1% rise in comparable-store sales. That performance brought Walgreens’ total sales for the 2013 calendar year to $73.72 billion, a 4.5% increase.

The impressive numbers were fueled mainly by a strong pharmacy performance. Rx sales in December surged 10.2%, or 9% in comparable stores.

A host of factors shaped the pharmacy results, including a benefit of 2.9% from calendar day shifts (December had one additional Tuesday and one less Saturday compared with 2012). Offsetting that positive element were a 1.2% hit from lower-priced generic drug introductions, a 0.4% negative impact from a weaker flu season and a 0.2% negative effect from fewer flu shots administered year-over year.

Despite the less severe flu season, the number of prescriptions filled in comparable stores expanded 5.3%, helped by a 2.9% lift from the calendar shift.

At the front end, total sales in December grew 4% while comparable-store results grew 2.5%. A healthy 3.8% increase in average transaction was partially offset by a 1.3% drop in customer traffic.

Rite Aid Corp. posted more modest but nonetheless solid numbers. Total sales for the nation’s No. 3 drug chain rose 2.7% to $2.11 billion, with pharmacy sales accounting for 63.6% of the mix. Same-store sales advanced 2.9%, driven by a 4.1% gain in the pharmacy.

Rx results reflected a negative impact of 102 basis points from new generic drug introductions. Additionally, the number of prescriptions dispensed fell 2%, reflecting fewer flu-related prescriptions and vaccinations. Front-end comparable-store sales, meanwhile, improved 1%.

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