Walgreen Co. saw same-store sales climb in March, as strong results in the pharmacy overcame the negative impact of this year's later Easter holiday in the front end.

Walgreens, same-store sales, comparable-store sales, March, comp-store sales, front end, pharmacy, prescription count, prescriptions filled, pharmacy sales, March sales, Walgreens' calendar 2014 sales, fiscal 2014 year-to-date sales, drug chain, drug stores, Mark Miller, William Blair & Co.

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Same-store sales at Walgreens gain in March

April 3rd, 2014

DEERFIELD, Ill. – Walgreen Co. saw same-store sales climb in March, as strong results in the pharmacy overcame the negative impact of this year's later Easter holiday in the front end.

Walgreens said Thursday that comparable-store sales rose 3.5% year over year for March, compared with a 4.5% gain in February. Calendar day shifts (one extra Monday and one fewer Friday) lifted comp-store sales by 0.6%, while same-store results were negatively impacted by 1 percentage point from introductions of new generic drugs and 0.2 percentage point from a lower incidence of flu.

In the front end, same-store sales fell 3.4% in March, with Easter falling on April 20 this year versus March 31 last year, Walgreens noted. Customer traffic in comparable stores declined 4%, while basket size grew 0.6%.

Walgreens said will report combined comp-store sales for March and April with its April sales results.

Comparable pharmacy sales advanced 8% in March and were up a calendar day-shift adjusted 7.1%, the company said. Calendar day shifts lifted comparable pharmacy sales in by 0.9 percentage point. Calendar day-shift adjusted comparable pharmacy sales were negatively impacted by 1.6 percentage points from new generics and by 0.4 percentage point from a lower incidence of flu.

Prescription count at comparable stores gained 5.1% during March and, on a calendar day-shift adjusted basis, grew 4.2%. Calendar shifts positively impacted prescriptions filled at comparable stores by 0.9 percentage point, while the lower incidence of flu in the month had a negative impact of 0.3 percentage point.

"Same-store prescriptions increased 4.2% in the month on a calendar adjusted basis, a nice acceleration from the 2.2% increase in February. Notably, the two-year stack trend accelerated to 11.6% in March versus 8.7% in February," William Blair & Co. analyst Mark Miller said in a research note Thursday on Walgreens' March results. "We believe that the biggest drivers of the script growth continue to be market share gains in Medicare Part D and growth of 90-day (which contributed 2.4% to the comp), although the end of flu season is also a contributing factor. Pharmacy same-store sales increased 7.1% on a calendar-adjusted basis, tracking ahead of our fiscal third-quarter estimate of 4%."

Walgreens said total March sales increased 4.5% to $6.43 billion from $6.16 billion a year earlier, reflecting a 2.6% decline in the front end and an 8.9% gain in the pharmacy. Walgreens said pharmacy sales accounted for 64.7% of overall sales for the month.

To date through March, Walgreens' calendar 2014 sales totaled $18.86 billion, up 4.3% from $18.09 billion in the prior-year period. Fiscal 2014 year-to-date sales, covering the first seven months, came in at $44.39 billion, an increase of 5.4% from $42.12 billion in the fiscal 2013 period.

Walgreens said it opened 13 stores during March, including three relocations, and it acquired three stores and closed one location. As of March 31, the drug chain had 8,221 drug stores, 144 more than a year ago, including 63 net stores acquired over the last 12 months.