DEERFIELD, Ill. — Fueled by front-end business, Walgreen Co. in December continued its same-store sales growth from the previous month.
Walgreens on Wednesday said overall comparable-store sales (excluding Duane Reade) in December rose 2.8%, which along with a 3.2% gain in November continued a rebound from a 1.3% same-store sales decline in October. The drug store chain noted that calendar day shifts negatively impacted comp-store sales by 0.5 percentage point.
In the front end, same-store sales climbed 3.6% in December, marking the highest increase in 14 months, according to Walgreens. Customer traffic in comparable stores edged up 0.9%, and basket size grew 2.7%, the company said.
Comparable-pharmacy sales, meanwhile, rose 2.2% for December. Walgreens said pharmacy same-store sales were negatively impacted by 0.8 percentage point because of calendar day shifts and by 2.6 percentage points from generic drug introductions in the last 12 months.
Prescriptions filled at comparable stores were up 2.9% in December, including 1.1 percentage points from more patients filling 90-day prescriptions, according to Walgreens. Calendar day shifts negatively impacted prescriptions filled in comparable stores by 0.8 percentage point, and the higher incidence of flu positively impacted comparable prescriptions filled by 0.5 percentage point. Prescriptions filled at comparable stores were negatively impacted by 0.3 percentage point because of fewer flu shots.
Flu shots administered at pharmacies and clinics during December totaled more than 380,000, with nearly 6 million flu shots having been administered season-to-date, the company said.
Despite the December gain, Walgreens appeared to fall short of Wall Street’s consensus estimate for an overall same-store sales increase of around 3.3%, according to analysts polled by Thomson Reuters.
In a monthly retail sales forecast, William Blair & Co. analyst Mark Miller wrote about Walgreens, "We project total December comp-store sales to increase 4%, slightly ahead of the 3.4% consensus forecast. Our pharmacy comp estimate of 3.5% is roughly in line with the 3.8% consensus and includes an approximate 1% lift from flu shots. In the front end, we project Walgreens’ comp-store sales to increase 4.5%, above the current 2.9% consensus, driven in part by an easy -3.1% year-ago comparison. Our pharmacy comp forecast implies a modest improvement in Walgreens’ two-year stacked trend relative to November. However, our above-consensus front-end comp estimate for December implies a modest sequential deceleration in the company’s two-year stacked trend."
Deutsche Bank Securities analyst Bill Dreher, in a December retail sales preview, had forecast a same-store sales increase of 2.5% for Walgreens, including gains of 3.5% in the front end and 2% in the pharmacy. Dreher’s comp-store estimate for Walgreens’ front-end performance was above Wall Street’s forecast, while his prediction for overall and pharmacy same-store results was below the consensus view.
Overall in December, Walgreens saw revenue surge 7.5% to $6.81 billion from $6.34 billion a year earlier. The company said Duane Reade stores contributed 2.5 percentage points to the total sales increase for the month.
Total front-end sales rose 9.5% in December, including 3.7 percentage points from Duane Reade stores, while pharmacy sales gained 6% in the month.
Calendar year-to-date sales for 2010 came in at $68.87 billion, up 6% from $64.97 billion in 2009, according to Walgreens.
The retailer said it opened three stores during December, including one relocation, and acquired three stores. As of Dec. 31, the company operated 7,655 drug stores, 506 more than a year ago, including 294 stores acquired over the last 12 months.
