Drug chain same-store sales up, but consumers still wary

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NEW YORK — Drug chains posted strong results last month, although anemic sales in other retail channels suggest consumers remain reluctant to spend any more than necessary.

Walgreen Co. recorded volume of $6.1 billion, up 7.8% over August 2010. Total front-end sales climbed 6.8%, and comparable front-end sales rose 4.8%. Customer traffic in comparable stores increased 2.5%, and basket size moved ahead 2.3%.

Walgreens’ pharmacy sales surged 7.6%, while comparable-pharmacy sales jumped 6.1%. Overall, same-store sales advanced 5.6%

Rite Aid Corp. reported a 2.5% gain, to $2.3 billion, and a 2.2% increase in same-store sales. Front-end same-store sales advanced 2.5%, while pharmacy same-store sales climbed 2%.

Same-store sales at 26 retailers tracked by Kantar Retail — most of them selling apparel — were up 4.9% in August. Most reported solid back-to-school results at the same time that volume was hurt by Hurricane Irene and belt tightening by shoppers.

“Shoppers are clearly moving to curb their spending, although it’s hard to see amid the impact of the hurricane and unavoidable back-to-school spending,” Kantar senior economist Frank Badillo says.

Kantar’s survey of shopper intentions suggests same-store sales results will likely weaken in the next few months, although the outlook for the holiday season looks brighter than it has been for the past few years.

Total retail sales volume in August was unchanged, according to the Commerce Department, as unemployment and flat income growth limited demand. The stagnation followed a 0.3% gain in July that was below expectations.

Consumer confidence plunged in August as shoppers became increasingly convinced a double-dip recession was at hand, according to a Thomson Reuters/University of Michigan survey.

Most households reported worsened finances, no expectations for income gains, and were more likely to anticipate a rising unemployment rate during the year ahead.

Optimism over the impact of fiscal policies, however, gave way to a sense of despair about the role of government, the survey found.


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