Table of Contents
DEERFIELD, Ill. — Walgreen Co. saw comparable-store sales rise in August, reporting increases in both the front end and the pharmacy.
 |
Walgreens said Thursday that comp-store sales climbed 3.7% in August, reflecting negative impacts of 1.4 percentage point from calendar day shifts (one extra Sunday and one fewer Thursday versus a year ago) and 1.2 percentage point from introductions of new generic drugs.
The result continued Walgreens’ same-store sales growth trend, most recently including gains of 5.2% in July and 7.5% for June.
In the front end, comp-store sales were up 1.4% in August. Walgreens said customer traffic in comparable stores declined 1.7%, though basket size grew 3.1%.
"Front-end comp growth in the month was driven by a 3.1% increase in the basket, offset by a 1.7% decline in traffic," William Blair & Co. analyst Mark Miller wrote in a research note Thursday. "Strong categories in the month included cough/cold, candy, family planning and mobile accessories. Weaker categories in the month included soft drinks and e-cigarettes. The company indicates that beauty performed better than average, while the vitamins/supplements category was average for the month."
Comparable pharmacy sales rose 5% for August and, including adjustments for calendar day shifts, were up 7.1%, Walgreens said.. Pharmacy same-store sales in the month were negatively impacted by 2.1 percentage points from calendar day shifts and by 1.8 percentage points from new generics.
Prescription count at comparable stores edged up 1.1% in August and, on a calendar day-shift adjusted basis, grew 3.2%. Calendar shifts negatively impacted prescriptions filled at comparable stores by 2.1 percentage points, according to Walgreens.
Total sales for August climbed 3.6% to $6.39 billion from $6.16 billion a year earlier, including gains of 2.1% in the front end and 5.4% in the pharmacy for the month.
Calendar 2014 sales through the end of August came in at $50.91 billion, an increase of 5.7% from $48.19 billion in the prior-year period.
Walgreens reported that for its fiscal 2014 fourth quarter, the company’s revenue totaled $19.06 billion, up 6.2% from $17.95 billion a year earlier. Same-store sales in the quarter rose 5.6%, including gains of 1.3% in the front end and 8.2% in the pharmacy. Script count at comparable stores grew 3.9%.
Overall fiscal 2014 sales for Walgreens were up 5.8% to $76.43 billion from $72.23 billion in fiscal 2013.
As of Aug. 31, Walgreens operated 8,206 drug stores, 91 more than a year ago, including 70 net stores acquired over the last 12 months.
Also on Thursday, Walgreens reiterated an earlier warning of decreased gross profit margin for the fourth quarter.
The drug chain said that in an Aug. 6 conference call it told analysts that fourth-quarter gros profit margin is expected to be down a similar percentage year over year to the third quarter, due to ongoing gross profit margin pressures, including recent changes in the environment of the company’s pharmacy business such as generic drug inflation, reimbursement pressure and a shift toward 90-day prescription refills at retail locations and Medicare Part D. The company also pointed out that last year’s fourth quarter included net gains from certain litigation matters, which reduced selling, general and administrative expenses by almost 1 percentage point.
*Editor’s Note: Article updated with analyst comment.
