Walgreen Co. reported increased comparable-store sales for May, led by solid results in its pharmacy business.


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May same-store sales climb at Walgreens

June 4th, 2014

DEERFIELD, Ill. – Walgreen Co. reported increased comparable-store sales for May, led by solid results in its pharmacy business.

Walgreens said Wednesday that comp-store sales rose 4.4% year over year in May. Same-store sales were negative impacted by 1.3 percentage points from calendar day shifts (one extra Saturday and one fewer Wednesday versus a year ago) and by 0.8 percentage points from introductions of new generic drugs, which have lower prices.

The result continued Walgreens' steady same-store sales growth during 2014, in which the chain drug retailer has seen gains of 7.6% in April, 3.5% in March, 4.5% in February and 2.9% in January.

In the front end, comp-store sales were up 2.6% for May. Customer traffic in comparable stores dipped 0.5% for the month, but basket size grew 3.1%.

Comparable pharmacy sales climbed 5.5% in May and, on a calendar day-shift adjusted basis, gained 7.6%. Walgreens said comparable pharmacy sales were negatively impacted by 2.1 percentage points from calendar day shifts and by 1.3 percentage points from new generics.

Prescription count at comparable stores grew 3.5% for May and was up 5.6% on a calendar day-shift adjusted basis. The calendar shifts negatively impacted prescriptions filled at comparable stores by 2.1 percentage points, according to Walgreens.

Overall sales in May came in at $6.57 billion, up 6% from $6.19 billion a year earlier. For the month, revenue rose 3% in the front end and 7.9% in the pharmacy. Pharmacy sales accounted for 64.2% of total May sales.

Analyst Mark Miller of William Blair & Co. said that Walgreens' sales in May were stronger than forecast. In particular, the drug chain had robust growth in script count, he noted.

"Same-store prescriptions increased 5.6% in the month on a calendar-adjusted basis, accelerating from the 4.3% increase in April. On a two-year stack basis, same-store script growth accelerated to 13.6% in May, up from 10.6% in April," Miller wrote in a research note released Wednesday. "This is the strongest two-year script growth in four years, with key drivers including the enhanced participation in Medicare Part D plans, high-teens growth of 90-day prescriptions at retail, some initial benefit from the Affordable Care Act, and continuing win-back of customers in Express Scripts plans."

Meanwhile, Walgreens said sales for its fiscal 2014 third quarter ended May 31 advanced 6.5% to $19.49 billion from $18.65 billion in the prior-year period. Same-store sales increased 5.1%, reflecting gains of 2.2% in the front end and 6.8% in the pharmacy. Prescriptions filled at comparable stores were up 4% in the quarter.

For the calendar year to date, Walgreens' sales totaled $31.9 billion, up 5.5% from $30.24 billion a year earlier. Fiscal 2014 year-to-date sales, covering the first nine months, rose 5.8% to $57.42 billion from $54.28 billion in fiscal 2013.

Walgreens opened eight drug stores during May, including one relocation, and acquired one store and closed 23 stores. The drug chain noted that nearly all of the May store closings were part of its previously announced plan to shut 76 stores during the fiscal 2014 second half in optimizing its asset base.

As of May 31, Walgreens operated 8,216 drug stores, 120 more than a year ago, including 70 net stores acquired over the last 12 months.

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