Slower business in the front end reined in same-store sales growth at Walgreen Co. for October. The company also gave estimates of the business impact of its dispute with pharmacy benefit manager Express Scripts Inc.


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Walgreens sees same-store sales growth tail off

November 3rd, 2011

DEERFIELD, Ill. – Slower business in the front end reined in same-store sales growth at Walgreen Co. for October. The company also gave estimates of the business impact of its dispute with pharmacy benefit manager Express Scripts Inc.

Walgreens said Thursday that October comparable-store sales rose 2.6%, including a 0.5 percentage point lift from calendar day shifts. That was down from a 3.1% gain in September and was on the lower end of recent month-to-month increases in comp-store sales, including upticks of 5.6% in August, 2.7% in July, 4.8% in June and 5.6% in May.

In the front end, same-store sales in October edged up 1.7%. Customer traffic in comparable stores dipped 0.9%, while basket size grew 2.6%, Walgreens said.

Comparable pharmacy sales were up 3.1% for the month, reflecting a 0.7 percentage point positive impact from calendar day shifts and negative impacts of 1.8 percentage points from generic drug introductions and 1.1 percentage points because of lower incidence of cough, cold and flu, according to the company.

Prescriptions filled at comparable stores climbed 2.5% in October. Calendar day shifts had a 0.7 percentage point positive impact on prescriptions filled, while lower incidence of flu negatively impacted comparable prescriptions filled by 0.5 percentage point, Walgreens noted. The company also said the estimated negative impact on comparable prescriptions filled from prescription transfers and other trend analysis of prescriptions managed by Express Scripts was approximately 0.6 percentage point.

Walgreens reported that based on its current estimates, and the assumption that it won't be in Express Scripts' pharmacy networks as of Jan. 1, 2012, including for clients such as Tricare and WellPoint, the drug chain expects to achieve 97% to 99% of its fiscal 2011 prescription volume in fiscal 2012.

"Because the Express Scripts/Medco merger remains under review, the company has made no assumption regarding the consummation, timing or impact of the merger related to its business for fiscal 2012," Walgreens added.

Overall in October, Walgreens' revenue totaled $6.13 billion, an increase of 4.7% from $5.86 billion a year earlier. Pharmacy sales gained 4.6%, and front-end sales were up 3.3%.

The company said flu shots administered at pharmacies and clinics season-to-date were nearly 4.1 million, down from about 4.5 million last year.

Calendar year-to-date sales came in at $60.12 billion, up 6.9% versus a year ago. Fiscal 2012 year-to-date sales for the first two months were up 5% year over year to $12.07 billion.

Walgreens opened 17 stores in October, including five relocations, and the retailer acquired one store and closed six stores. As of Oct. 31, the chain operated 7,786 drug stores, 179 more than a year ago, including 34 stores acquired over the last 12 months.

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