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Walgreens sees same-store sales rise in May
June 5th, 2013
DEERFIELD, Ill. – Same-store sales at Walgreen Co. continued to improve in May, with the drug chain reporting a larger gain than in April.
Walgreens said Wednesday that comparable-store sales in May rose 2.8%, reflecting negative impacts of 0.3 percentage point from calendar day shifts (one extra Friday and one fewer Tuesday) and 2.3 percentage points from introductions of lower-priced generic drugs.
The May result exceeded a 1.2% comp-store sales increase in April and a 0.7% rise in March. Except for a 0.6% dip in February, Walgreens has seen year-over-year gains in same-store sales each month in 2013, after a year of monthly comp-store sales declines.
In the front end, May same-store sales increased 1.2%. Customer traffic in comparable stores fell 3.5% and basket size grew 4.7% during the month.
Comparable pharmacy sales climbed 3.8% in May and increased by a calendar day-shift adjusted 4.2%, according to Walgreens. Calendar day shifts negatively impacted pharmacy same-store salesby 0.4 percentage point, while calendar day-shift adjusted comparable pharmacy sales were negatively impacted by 3.7 percentage points from new generic drugs, the company said.
Prescription count at comparable stores rose 7.1% for May and was up 7.5% on a calendar day-shift adjusted basis. The calendar shifts negatively impacted prescriptions filled at comparable stores by 0.4 percentage point.
Walgreens reported that the percentage of former Express Scripts prescriptions returning to its pharmacies continued to grow in May.
"The company indicated the recapture rate of Express Scripts customers continued to increase in May, which we estimate is lifting script growth by around 4% to 5%," William Blair & Co. analyst Mark Miller wrote in a research note Wednesday on Walgreens' May sales. "In addition, its status in preferred Part D arrangements is also aiding script growth as more senior citizens become educated about the benefits in these plan designs. These tailwinds should persist throughout the year."
Walgreens said its total revenue in May rose 4.3% to $6.22 billion from $5.97 billion a year earlier. Front-end sales were up 3.4 %. Pharmacy sales increased 4.4% and accounted for 63.1% of total sales for the month.
Registrations for Walgreens' Balance Rewards customer loyalty program, which launched in September, totaled more than 72 million through May, the company said.
"The loyalty card program now has an impressive 72 million members, although it is hard to discern much of a lift to front-end sales nine months into the program," Miller said in his report. "Management believes the top-line benefit will increase as more customers redeem points, and margins should also benefit with higher pull-through on vendor-promoted and private-brand items."
Sales for Walgreens' fiscal 2013 third quarter came in at $18.34 billion, up 3.3% year over year, the retailer repored. Same-store sales grew 1.3% in the quarter, including gains of 0.3% in the front end and 2% in the pharmacy. Script count at comparable stores rose 7%.
For the 2013 calendar year to date, Walgreens sales edged up 2.9% year over year to $30.27 billion. Sales for the first nine months of fiscal 2013 were $54.30 billion, down 0.5% from a year earlier.
Walgreens said it opened 13 stores in May, including two relocations, and closed one store. As of May 31, the retailer operated 8,096 drug stores, 207 more than a year ago, including 70 net stores acquired over the last 12 months.
*Editor's Note: Article updated with analyst comment.