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Same-store sales climb in August at Walgreens
September 6th, 2011
DEERFIELD, Ill. – Walgreen Co. turned in a robust same-store sales performance in August after calendar day shifts impacted results the previous month.
Walgreens said Tuesday that August comparable-store sales rose 5.6%, compared with a 2.7% increase in July and in line with strong gains of 4.8% in June and 5.6% in May. Walgreens noted that in August calendar day shifts (one extra Wednesday and one fewer Sunday versus a year ago) positively impacted total comp-store sales by 1.4 percentage points.
In the front end, same-store sales advanced 4.8% in August. Walgreens reported that customer traffic in comparable stores was up 2.5% for the month, while basket size grew 2.3%.
Same-store sales in the pharmacy climbed 6.1% during August. Calendar day shifts positively impacted pharmacy same-store results by 2.2 percentage points, while generic drug introductions in the last 12 months had a negative impact of 1.7 percentage points, according to Walgreens. Prescriptions filled at comparable stores increased 5.2% in August, reflecting a positive impact of 2.2 percentage points from calendar day shifts.
Overall August sales came in at $6.10 billion, up 7.8% from $5.66 billion a year earlier. Revenue rose 6.8% in the front end and 7.6% in the pharmacy during the month. Walgreens said Hurricane Irene had no significant net effect on total sales.
Walgreens closed out its fiscal 2011 fourth quarter and year in August. Sales for the fourth quarter were $17.94 billion, up 6.4% from $16.87 billion a year earlier. Comp-store sales increased 4.3% in the quarter, reflecting gains of 4.7% in the front end and 4.2% in the pharmacy. Prescriptions filled at comparable stores rose 3.6%.
Fiscal 2011 sales totaled $72.16 billion, a gain of 7% from $67.42 billion in the previous year. Same-store sales for fiscal 2011 rose 3.3%.
Walgreens said calendar year-to-date sales are up 7.4% to $48.02 billion from $44.72 billion in the prior-year period. Flu shots administered season-to-date at pharmacies and clinics totaled more than 300,000, the company added.
"Overall, August represents a strong final month for Walgreens' fiscal 2011," analyst Mark Miller of William Blair & Co. wrote in a research note released Tuesday.
The chain's 5.6% same-store sales gain in August was in line with William Blair & Co.'s 5.5% estimate and a bit higher than the 5.2% consensus analyst forecast, he noted.
Regarding the front-end performance, Miller said, "Core categories, such as health and beauty and vitamins performed well, while beer and wine continued to add 50 basis points to the front-end comp. Walgreens indicated that summer seasonal categories were solid overall, particularly in the southern region of the country, where severe heat is driving
strong sales for fans and other high-margin, general merchandise items.
"Walgreens described its August back-to-school performance as OK so far, although September tends to be the more important back-to-school month for drug retailers, as mass merchants tend to dominate back-to-school in August," he added. "Management continues to have no problem passing through most of the product cost inflation it has seen to date."
Walgreens said that during August it opened 21 drug stores, including three relocations, and acquired three stores and closed three locations, resulting in a net gain of 18 stores in the month. As of Aug. 31, the drug chain operated 7,760 drug stores, 199 more than a year ago, including 32 stores acquired over the last 12 months.
*Editor's Note: Article updated with analyst comment.