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Walgreens sees same-store sales lift in June
July 6th, 2011
DEERFIELD, Ill. – Solid business in both the pharmacy and the front end propelled Walgreen Co. to its eighth straight month of same-store sales gains.
Walgreens said Wednesday that comparable-store sales climbed 4.8% year over year in June, aided by a 0.2 percentage point positive impact from calendar day shifts. The drug store chain has seen its comp-store results surge since last fall, posting its largest monthly same-store increases so far this year in May (5.6%) and January (6.1%).
In the front end, same-store sales were up 4.7% in June. Customer traffic in comparable stores edged up 1.3%, and basket size rose 3.4%.
The pharmacy saw similar results as comp-store sales gained 4.9% for the month. Walgreens noted that comparable pharmacy sales reflect a positive impact of 0.3 percentage point from calendar day shifts and a negative impact of 2.1 percentage points from generic drug introductions.
Prescriptions filled at comparable stores advanced 5% in June, with calendar day shifts providing a 0.3 percentage point positive impact, the retailer said.
William Blair & Co. analyst Mark Miller characterized Walgreens' June sales results as "suprisingly strong," besting his firm's same-store sales forecast for a 3% gain and the consensus analyst projection for a 3.3% increase.
"The largest surprise came in the front end, where comps increased 4.7%, well above our 2.0% estimate and the 2.5% consensus projection. On a two-year 'stacked' basis, Walgreens’ front-end comp accelerated sharply to 6.9% from an average of 3.7% over the first five months of calendar 2011," Miller wrote in a research note on Walgreens' June sales performance.
"Nearly all major categories across the front of the store continue to benefit from improved assortment (i.e. the CCR initiative), with the recent introduction of beer and wine adding 60 basis points to the front-end comp," he pointed out. "Walgreens also commented that seasonal merchandise was one of the strongest categories, which bodes well for front-end gross margins."
Overall, Walgreens' sales in June came in at $6.04 billion, up 6.8% versus a year earlier. Revenue for the month was up 6.4% in the front end and 6.2% in the pharmacy.
For the calendar year to date, the drug chain's sales totaled $36.11 billion, representing a 7.8% year-over-year gain. Sales for the first 10 months of fiscal 2011 were up 7.2% to $60.25 billion.
Walgreens said it opened 15 stores in June (including two relocations), acquired seven stores and closed one store, resulting in a net increase of 19 stores for the month. As of June 30, the chain operated 7,733 drug stores, 192 more than a year ago, including 29 stores acquired over the last 12 months.
The retailer added that in July, its same-store pharmacy sales and prescriptions filled will be negatively impacted by calendar day shifts, with one additional Sunday and one fewer Thursday versus a year earlier.
*Editor's Note: Article updated with analyst comment.