Credit Suisse: December drug channel comps will be lackluster

Year-over-year Rx growth also is down

NEW YORK — Retailers will report weak December front-end sales growth across the drug channel as continued inflation likely was offset by the slow start to the flu season and disappointing overall traffic and volume growth, Credit Suisse research analyst Ed Kelly suggested in a note published Tuesday.

"While drug stores have been fairly successful passing through product cost inflation at the shelf, our Nielsen Trend Tracker shows that volumes have decelerated in recent months given the weak consumer and normal price elasticity," he wrote.

In addition to the economy, year-over-year prescription growth was down 70 basis points for the four weeks ended Dec. 16, Kelly noted, citing IMS Health data.

Kelly projected Walgreens comparable sales will be flat for December (the chain's monthly sales will be released Jan. 5) on account of difficult year-ago comparisons across the front end and an acceleration of lost Express Script prescriptions. Kelly expects the Express Script impact to accelerate from November — to a 200 basis point impact from the 110 basis point impact reported in November.

Kelly projected Rite Aid total same-store sales will be up between 1% and 2%, with a 0.5% lift across front-end comparable sales and a 2% lift across pharmacy sales — a projection that incorporates a negative 200 basis-point impact from new generics, such as Lipitor. Rite Aid reports December sales Jan. 4.

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