Walgreens: March sales down; April Easter will benefit front-end sales

Rxs filled at comparable stores down due to exit from Express Scripts

DEERFIELD, Ill. — Walgreens posted March sales of $6 billion, a decrease of 4.3% compared with the same month in fiscal year 2011.

“We continued to see growth in our front-end business, and with Easter falling on Apr. 8 this year, we anticipate that much of our Easter sales will be reflected in our April results,” Walgreens EVP and CFO Wade Miquelon said. “In addition, our new advertising circular strategy has helped drive profitable sales.” Walgreens launched its new weekly ad circular, with additional online savings, in mid-February.

Prescriptions filled at comparable stores decreased 11.4% in March. The negative impact on comparable store prescriptions filled due to no longer being part of the Express Scripts pharmacy network was 10.7 percentage points. Calendar day shifts in March, which had one additional Friday and Saturday, and one fewer Tuesday and Wednesday, compared with March 2011, negatively impacted prescriptions filled in comparable stores by 2.1 percentage points. And lower incidence of flu negatively impacted comparable store prescriptions filled by 0.7 percentage points.

Prescriptions processed by Express Scripts comprised 12.6% of Walgreens prescriptions in March 2011.

March pharmacy sales decreased 8.4%, while comparable-store pharmacy sales decreased 11.1%.

Prescriptions filled in March were down across the industry, according to a research note published by Credit Suisse on Tuesday. Citing IMS Health, Credit Suisse noted that prescriptions were down 120 basis points in March, which represented a marginal improvement versus the 170 basis point decline in February. "The flu season now seems to be trailing off without ever really materializing this year," noted Ed Kelly, Credit Suisse research analyst. "The [Centers for Disease Control and Prevention] reported that only 1.9% of patients visiting healthcare centers displayed flu-like symptoms, slightly below the 2.1% reported during the same period last year."

Total front-end sales were down 2.5%, compared with the year-ago period, though comparable store front-end sales were up 1.2%. Customer traffic in comparable stores decreased 1%, while basket size increased 2.2%.

Sales in comparable stores decreased by 6.8%. The effect of calendar day shifts negatively impacted total comparable sales by 1.3 percentage points.

Calendar year-to-date sales were $17.7 billion, a decrease of 1.8% from $18 billion in 2011. Fiscal 2012 year-to-date sales for the first seven months were $42.8 billion, up 1.6% from $42.1 billion in fiscal 2011.

The company will report combined comparable-store sales for March and April with its April sales results.

Walgreens opened eight stores during March, including one relocation.

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