Inside This Issue - News
Retail sales take a turn for the better
August 27th, 2012
NEW YORK – Retail sales rose in July for the first time in four months, according to the Commerce Department, and a survey of importers and manufacturers found them upbeat about the upcoming fall and winter shopping season.
Retail sales in July were up 0.8% over June, and 4.1% over July 2011, according to the Commerce Department. The month-to-month gain is the largest since February and well above the expectations of analysts, who had forecast an increase of just 0.3%.
“Despite high unemployment, and political and fiscal uncertainty, consumers are spending again, albeit cautiously,” says National Retail Federation chief economist Jack Kleinhenz. “Retail sales continue to remain resilient in the face of bleak international news, with retailers on track with sustained sales growth year over year and year to date. Retail sales will continue to see modest growth in the fall and winter.”
Support for that view also comes from a poll of importers and manufacturers that sell to America’s major retailers. Conducted by Capital Business Credit, the survey found that 77% of the respondents believe the fall/winter shopping season will be the same or stronger than last year, and 87% believe the back-to-school season will be the same or stronger.
Against that backdrop, Rite Aid Corp. reported that its July same-store sales were up 0.5% over the prior-year period. Front-end comparable-store sales increased 1.2%, while pharmacy same-store sales, hurt by generic drug introductions, rose just 0.2%. Prescription count at comparable stores increased 4.5%.
Rite Aid’s total drug store sales for the four-week period decreased 0.1% to $1.88 billion. Prescription drugs accounted for 67.5% of the company’s sales, and third-party prescription volume represented 96.4% of pharmacy sales.
Walgreen Co.’s results, meanwhile, continued to be hampered in July by its nonparticipation in the Express Scripts Inc. pharmacy network. (Walgreens and Express Scripts recently settled their contract dispute, and the drug chain will return to the pharmacy network on September 15.)
For July, Walgreens reported sales of $5.59 billion, a decrease of 3.7% from July 2011. Same-store sales were down 7%.
Total front-end sales were down 0.8%, while comparable front-end sales decreased by 2.4%. Customer traffic in comparable stores decreased by 3.8%, while basket size increased by 1.4%.
July pharmacy sales at Walgreens decreased by 5%, while same-store pharmacy sales decreased by 9.7%. The number of prescriptions filled at comparable stores decreased by 5.2%.
Not being part of the Express Scripts network was the biggest reason for Walgreens’ same-store pharmacy sales declines, but generic drug introductions over the past 12 months also had a negative impact on results.