Walgreen Co. continued to build same-store sales momentum in August, turning in gains in both the pharmacy and front end.


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Walgreens fuels same-store sales growth in August

September 5th, 2013

DEERFIELD, Ill. – Walgreen Co. continued to build same-store sales momentum in August, turning in gains in both the pharmacy and front end.

Walgreens said Thursday that comparable-store sales rose 4.8% year over year in August, reflecting negative impacts of 1.2 percentage points from calendar day shifts (one extra Saturday and one fewer Wednesday) and 0.8 percentage point from introductions of lower-price generic drugs.

The August comp-store sales growth was less than the 6.3% gain in July but marked the drug chain's second-largest monthly gain this year. Before the July result, the biggest increase was a 2.8% uptick in May.

Front-end same-store sales edged up 2.2% for August. Customer traffic in comparable stores dipped 1.5%, yet basket size grew 3.7%.

In the pharmacy, comp-store sales were up 6.4% in August and rose by a calendar day-shift adjusted 8.2%, according to Walgreens. The company said pharmacy same-store sales were negatively impacted by 1.8 percentage points from calendar day shifts, while new generics shaved calendar day-shift adjusted comparable pharmacy sales by 1.3 percentage points.

Walgreens noted that the percentage of Express Scripts prescriptions returning to its pharmacies continued to rise in August. Prescription count at comparable stores grew by 5.6% for the month and by 7.4% on a calendar day-shift adjusted basis. Calendar day shifts negatively impacted prescriptions filled at comparable stores by 1.8 percentage points, the company said.

"Script growth continues to be driven by the return of Express Scripts customers, incremental Medicare Part D share gains, industry utilization growth (estimate 2% to 3%), and share gains as 90-day scripts migrate from mail to the retail channel," analyst Mark Miller of William Blair & Co. wrote in a research note Thursday on Walgreens' August sales.

Overall revenue for Walgreens in August came in at $6.17 billion, up 5.6% from $5.84 billion a year earlier. Sales advanced 3.9% in the front end and 6.4% in the pharmacy. For the month, pharmacy sales represented 64.3 percent of total sales.

Walgreens added that registrations for its Balance Rewards loyalty program totaled more than 83 million through August.

For the fiscal 2013 fourth quarter ended Aug. 31, sales climbed 5.1% to $17.95 billion. Same-store sales in the quarter gained 4.5% (4.9 percent day-fall adjusted), including increases of 1.7% in the front end and 6.2% (6.8 percent day-fall adjusted) in the pharmacy. Script count at comparable stores was up 6.8% (7.4 percent day-fall adjusted) for the fourth quarter.

Total sales for fiscal 2013 inched up 0.8% to $72.22 billion from $71.63 billion a year earlier. Calendar 2013 sales to date were $48.18 billion, up 3.7% year over year.

Walgreens said that in August it opened 14 stores, including two relocations. As of Aug. 31, the retailer operated 8,117 drug stores, 188 more than a year ago, including 67 net stores acquired over the past year.

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