Walgreen Co. saw comparable-store sales gain slightly in April, as improved pharmacy business and calendar day shifts helped offset the effect of introductions of generic drugs.

Walgreens, same-store sales, April, comparable-store sales, comp-store sales, April sales, comparable pharmacy sales, prescriptions filled, prescription count, front end, customer traffic, basket size, introductions of generic drugs, new generic drugs, Express Scripts, pharmacy sales, front-end sales, Mark Miller, William Blair & Co., CVS Caremark, Maintenance Choice

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Comp-store sales at Walgreens inch up in April

May 3rd, 2013

DEERFIELD, Ill. – Walgreen Co. saw comparable-store sales gain slightly in April, as improved pharmacy business and calendar day shifts helped offset the effect of introductions of generic drugs.

Walgreens said Friday that same-store sales for April edged up 1.2%, reflecting a positive impact of 2.2 percentage points from calendar day shifts (one extra Tuesday and one fewer Sunday) and a negative impact of 2.6 percentage points from new generic drugs, which carry lower prices but larger margins.

The April increase was above Walgreens' 0.7% same-store sales uptick in March and provided another sign that the drug chain's comp-store results are stabilizing. So far in calendar 2013, the retailer has reported same-store sales gains in three of the first four months, with a 3.7% increase in January ending a year of monthly comp-store sales declines.

For April, comparable pharmacy sales climbed 4.7% and were up by a calendar day-shift adjusted 1.3%, according to Walgreens. The company said pharmacy same-store sales got a lift of 3.4 percentage points from calendar day shifts but also reflected a negative impact of 4.1 percentage points from new generics.

Prescriptions filled at comparable stores surged 9.7% during the month and grew 6.3% on a calendar day-shift adjusted basis. Calendar shifts positively impacted prescription count by 3.4 percentage points, Walgreens said, adding that the percentage of former Express Scripts customers returning to its pharmacies continued to rise in April.

"Walgreens was lapping a tougher pharmacy comparison in April, so the two-year script growth was essentially unchanged from month to month. The company indicated the recapture rate of Express Scripts' customers continued to increase in April, which should help script growth by around 4% to 5%," William Blair & Co. analyst Mark Miller wrote in a research note Friday.

"Meanwhile, we estimate its status in Medicare Part D preferred-pharmacy arrangements is also helping comps by around 1%," Miller added. "Assuming these estimates are correct, Walgreens' underlying script growth appears to be trailing industry utilization growth slightly, suggesting a modest share loss with pharmacy plan design changes, including the increased penetration of CVS Caremark's Maintenance Choice program."

In the front end, Walgreens said same-store sales fell 4.3%. Customer traffic in comparable stores dropped 5.9%, and basket size grew 1.6%.

Walgreens' total April revenue came in at $5.98 billion, up 3.8% from $5.76 billion a year earlier. Front-end sales were down 2.9% for the month, and pharmacy sales increased 7.3%. The company said pharmacy sales accounted for 64.5% of overall April sales.

Sales for the combined months of March and April, which include the Easter holiday season, gained 3% from the year-ago period. March/April same-store sales were up 0.8%, reflecting a 0.2% decrease in the front end. Customer traffic in comparable stores was down 4% and basket size grew 3.8% during the period.

Walgreens reported that calendar 2013 sales to date were $24.07 billion, up 2.7% from $23.44 billion in 2012. Fiscal 2013 year-to-date sales, covering the first eight months, were down 1% to $48.10 billion from $48.59 billion a year earlier.

The retailer said it opened 14 drug stores during April, including four relocations, and closed one store.

As of April 30, Walgreens operated 8,086 drug stores, 231 more than a year ago, including 99 net stores acquired over the last 12 months.