Although overall retail sales flattened out in July, it was a good month for at least two of the nation’s largest drug chains.


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Drug chains stand out in July

August 25th, 2014

NEW YORK – Although overall retail sales flattened out in July, it was a good month for at least two of the nation’s largest drug chains.

Almost obscured by the media focus on its acquisition of Alliance Boots GmbH, Walgreen Co. beat Wall Street’s expectations while reporting a 6.1% increase in sales to $6.39 billion. On a comparable-store basis, sales rose 5.2%, ahead of the 4.5% forecast by analysts surveyed by Thomson Reuters.

Calendar shifts shaved 40 basis points from comparable-store results, while generic drug introductions trimmed another 110 basis points.

Total front-end sales improved 1.4%, while gaining 1.1% in comparable stores, just short of the 1.2% increase projected by analysts. The same-store sales increase in the front end was driven by a 3.7% rise in the average basket size that more than offset a 2.6% drop in customer traffic.

July pharmacy sales, meanwhile, grew 9.5%, reflecting a robust 7.6% advance in comparable stores that easily surpassed analysts’ target of a 6.2% rise. Pharmacy sales made up 66.5% of Walgreens’ top line.

Pharmacy comparable-store results included a negative impact of 60 basis points from calendar shifts and a 170-basis-point hit from generic introductions. Total prescriptions filled in comparable stores during the month rose 3.7%, reflecting a negative influence of 60 basis points from calendar shifts.

Rite Aid Corp. not only saw year-over-year increases in July, but also achieved sequential improvement over June’s numbers.

Total sales rose 4.1% to $1.98 billion, while comparable-store results expanded 4.6%, a significant advance over the 3.9% reported in June. Rite Aid has managed to increase its comp-store sales growth every month thus far in 2014.

The pharmacy, which generated 68.6% of total sales, reported a solid 6% comp-store increase that included a negative impact from generic introductions of 203 basis points. The prescription count in Rite Aid’s comparable stores increased 3.9%.

Front-end comp-store sales, meanwhile, gained 1.5%.

Elsewhere in retailing, July was not as bright, with overall retail sales growing 3.7% (3% excluding automobile sales), year over year, a deceleration from the 4.3% increase posted in June, according to the Commerce Department. July’s sequential increase from June was a meager 0.5%.

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