Same-store sales at Walgreen Co. edged up in August after coming in virtually flat the previous month.

Walgreens, same-store sales, August, comparable-store sales, pharmacy, front end, drug store, Duane Reade, Russell Redman, Mark Miller, William Blair & Co.

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Walgreens sees improvement in same-store sales

September 3rd, 2010

DEERFIELD, Ill. – Same-store sales at Walgreen Co. edged up in August after coming in virtually flat the previous month.

The drug store chain said Friday that sales in comparable stores rose 2.1% in August, up from a 0.4% uptick in July that followed a 2% gain in June and declines of 0.2% in May and April.

Walgreens noted that the effect of calendar-day shifts positively impacted total same-store sales by one percentage point and that the recenlty acquired Duane Reade stores aren't included in comparable-store sales results.

For August, front-end same-store sales inched up 0.7%. Customer traffic in comparable stores decreased 0.8%, while basket size increased 1.5%, according to the retailer.

"While many retailers are seeing higher traffic and lower average ticket, Walgreens' front-end experience is the opposite (0.8% decrease in traffic, 1.5% increase in average ticket)," William Blair & Co. analyst Mark Miller wrote in a research note on the retailer's August sales. "Overall, we believe front-end sales remain challenged by high
unemployment, although Walgreens — like the labor market overall — appears to be seeing modest sequential improvement," he added.

Meanwhile, pharmacy same-store sales climbed 2.9% in August. Walgreens said calendar-day shifts positively impacted comparable pharmacy sales by 1.5 percentage points and negatively impacted same-store pharmacy results by 2.6 percentage points due to generic drug introductions and by 0.3 percentage point due to a lower incidence of flu.

Prescriptions filled at comparable stores rose 5.1% in August, including 1.2 percentage points from more patients filling 90-day prescriptions. Calendar-day shifts positively impacted prescriptions filled in comparable stores by 1.7 percentage points, while the lower incidence of flu negatively impacted comparable prescriptions filled by 0.7 percentage point.

Overall sales in August gained 8.6% to $5.66 billion from $5.22 billion a year earlier, Walgreens reported, adding that Duane Reade stores contributed 2.8 percentage points to the total sales increase.

Pharmacy revenue was up 8.6% in August, while total front-end sales increased 8.3% for the month, including 4.8 percentage points from Duane Reade.

For the calendar year to date, overall sales were $44.74 billion, up 5.8% from a year ago.

Walgreens said total sales for its fiscal 2010 fourth quarter, which ended Aug. 31, were $16.89 billion, up 7.6%. Same-store sales for the quarter rose 1.5%.

In addition, Walgreens' overall revenue for fiscal 2010 came in at $67.44 billion, up 6.5% versus the previous year. Comparable-store sales for fiscal 2010 edged up 1.6%.

During August, Walgreens opened 27 stores, including four relocations, and closed five. As of Aug. 31, the chain operated 7,563 drug stores, 566 more than a year ago, including 281 stores acquired over the last 12 months.