Same-store sales at Walgreen Co. gained in January, but a lower incidence of flu negatively impacted pharmacy sales and script count.

Walgreens, same-store sales, January, comparable-store sales, comp-store sales, pharmacy sales, script count, comparable stores, front end, customer traffic, basket size, comparable pharmacy sales, new generic drugs, prescriptions filled, prescription count, January sales, flu shots, Walgreens' 2014 fiscal year, drug chain, drug stores, Mark Miller, William Blair & Co.

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Same-store sales at Walgreens edge up in January

February 5th, 2014

DEERFIELD, Ill. – Same-store sales at Walgreen Co. gained in January, but a lower incidence of flu negatively impacted pharmacy sales and script count.

Walgreens said Wednesday that sales in comparable stores rose by 2.9% in January. The company noted that calendar day shifts (one extra Friday and one fewer Tuesday) and new generic drugs negatively impacted comp-store sales in the month by 0.3 percentage point and 0.9 percentage point, respectively. The drug chain reported a 6.1% increase in same-store sales for December.

In the front end, January same-store sales were up 1.6%. Customer traffic in comparable stores declined 2.2%, but basket size grew 3.8% during the month.

Comparable pharmacy sales advanced 3.7% in January and rose by a calendar day-shift adjusted 4.1%, according to Walgreens. The company said calendar day shifts negatively impacted comparable pharmacy sales by 0.4 percentage point.

In addition, calendar day-shift adjusted comparable pharmacy sales were negatively impacted by 1.3 percentage points from new generics, which have lower prices but bigger profit margins, and by 0.5 percentage point from fewer flu shots in January compared with a year ago.

Prescriptions filled at comparable stores dipped 0.8% in January and were down 0.4% on a calendar day-shift adjusted basis, Walgreens said. Calendar shifts negatively impacted prescription count at comparable stores by 0.4 percentage point.

Overall January sales at Walgreens came in at $6.39 billion, up 3.7% from $6.17 billion a year earlier. Sales rose 2.4% in the front end and 4.6% in the pharmacy for the month. The drug chain noted that the lower incidence of flu had a negatively impact of 1.1 percentage points on January pharmacy sales, which accounted for 65.6% of total sales for the month.

"The lower incidence of flu and flu shots dispensed adversely impacted pharmacy sales by 1.1% and 0.5%, respectively, or a 1.6% negative impact to pharmacy comps year-to-year. Front-end sales were hurt by an estimated 0.7%, according to management," analyst Mark Miller of William Blair & Co. said in a research note Wednesday. "Removing these combined impacts, Walgreens' underlying total comp-store sales growth would have exceeded 4% in January — a standout performance versus mass retail competitors Target and Walmart, which had little-to-no comp growth in the month."

Walgreens reported that flu shots administered at pharmacies and clinics so far this flu season topped 7.5 million, compared with nearly 6.9 million last year.

For the first five months of Walgreens' 2014 fiscal year, sales totaled $31.92 billion, up 5.7% from $30.20 billion in the prior-year period.

Walgreens said that in January it opened 12 stores, including three relocations, and closed three stores. As of Jan. 31, the retailer operated 8,206 drug stores, 139 more than a year ago, including 60 net stores acquired over the last 12 months.

*Editor's Note: Article updated with analyst comment.