Robust front-end business, boosted by a later Easter holiday this year, drove a rise in comparable-store sales at Walgreen Co. in April.


Walgreens, same-store sales, April, comparable-store sales, comp-store sales, later Easter, front end, pharmacy, prescriptions filled, drug store, March/April period, Duane Reade, revenue, customer traffic, basket size, Russell Redman, Mark Miller, William Blair & Co.












































































































































































































































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Late Easter lifts April same-store sales at Walgreens

May 4th, 2011

DEERFIELD, Ill. – Robust front-end business, boosted by a later Easter holiday this year, drove a rise in comparable-store sales at Walgreen Co. in April.

Walgreens said Wednesday that same-store sales (excluding Duane Reade) rose 3.4% in April. Calendar day shifts negatively impacted total comp-store sales by 1.2 percentage points, the retailer noted.

The April increase kept Walgreens' monthly same-store sales on an upward trend in 2011. Comp-store sales rose 3% in March after gains of 3.1% in February and 6.1% in January.

In the front end, same-store sales climbed 6.5%, which Walgreens said was fueled by the later Easter (April 24 this year versus April 4 last year). Customer traffic in comparable stores increased 2.3%, and basket size was up 4.2%.

For the combined March/April period, comp-store sales edged up 3.3%. Front-end same-store sales for the two months rose 4.1%, customer traffic in comparable stores gained 1.6% and basket size increased 2.5%.

Analyst Mark Miller of William Blair & Co. wrote in a research note Wednesday that Walgreens' April comparable-store sales gain was essentially in line with his firm's 3.8% forecast and the 3.3% consensus analyst estimate.

"The key point from today's sales release, in our view, is that on a two-year 'stacked' basis, Walgreens combined March/April front-end comp averaged 3.9%, a modest sequential acceleration from the 3.4% average stacked comp for January/February, despite the steady rise in gasoline prices and less-than-ideal spring weather," Miller wrote. "Walgreens' April front-end comps rose 6.5%, above our 6.2% estimate and the 5.4% consensus forecast (we understand the Easter shift benefited comps by 250 basis points). Management indicated that its Easter sell-through was good, better than last year, but likely negatively affected by
weather in the month."

Miller added that the introduction of beer and wine continues to benefit Walgreens' front-of-store business, while cool and wet weather so far this spring has delayed the start of allergy season and impacted over-the-counter drug sales. "According to management, the level of 'allergy incidence' in April was 16% below a year ago," he stated. "Consequently, OTC allergy medicine sales were down modestly year over year in April."

Meanwhile, April same-store sales in the pharmacy edged up 1.8 percent. Walgreens said that result reflects negative impacts of calendar day shifts (1.9 percentage points) and generic drug introductions (1.9 percentage points) in the last 12 months.

Prescriptions filled at comparable stores in April increased 2.3%, reflecting a negative impact of 1.9 percentage points from calendar day shifts. Walgreens added that the recent switch of Allegra to over-the-counter availability negatively impacted prescriptions filled by 0.3 percentage point.

The 1.8% uptick in pharmacy same-store sales fell a bit short of William Blair's 2.5% projection and the consensus analyst forecast of 2.2%, Miller said. "However, the adverse
calendar shift in the pharmacy (190 basis points) was greater than we anticipated," he pointed out. "Excluding the adverse calendar shift, Walgreens' underlying pharmacy comps rose 3.7%, in line with our 3.9% estimate."

Walgreens' overall sales in April rose 5.5% year over year to $5.99 billion, with Duane Reade stores contributing 0.7 percentage point to the increase for the month. Revenue was up 9.4% in the front end (including a positive impact of 1.3 percentage points from Duane Reade) and 3.5% in the pharmacy, the drug store chain said. Sales for the March/April period were up 6.7% from the prior-year period.

For the calendar year-to-date period, sales came in at $23.99 billion, up 8.2% from $22.16 billion in 2010. Fiscal 2011 year-to-date sales for the first eight months were $48.13 billion, a gain of 7.3% from $44.86 billion a year earlier.

Walgreens said it opened 14 drug stores during April, including one relocation, and closed one store. As of April 30, the retailer operated 7,709 drugstores, 202 more than a year ago, including 23 stores acquired over the last 12 months.

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