Walgreens posts modest June gains

DEERFIELD, Ill. Walgreens drove sales ahead by 9.9 percent in June, compared with the same month last year, and eked out a respectable, if not stellar, 3.4 percent gain in same-store sales for the period. At the front end of the store, comp-store sales were up 3.5 percent over June of 2007.

In an increasingly difficult climate for retail sales and consumer spending, Walgreens’ sales last month topped out at $4.81 billion. June front-end sales were helped in part by strong sales of promotional products, consumables and gift cards, the company reported today.

Also driving demand at the front of the store was Zyrtec, which recently switched from prescription to over-the-counter status. Zyrtec alone accounted for 0.5 percentage points of front-end gains, Walgreens revealed. But the shift of Zyrtec from prescription to over-the-counter status also drained the company’s same-store pharmacy sales by 0.6 percent.

On the negative side, front-end sales were hurt by comparisons to last year’s introduction in June of alli, the over-the-counter diet medication, and promotional pricing in the photofinishing department.

June pharmacy sales rose 9.7 percent, while comparable pharmacy sales increased 3.3 percent—anemic by Walgreens’ historic standards. Dragging comp-store performance at the pharmacy were generic drug introductions, which yield generally higher margins but lower top-line sales.

“Comparable pharmacy sales were negatively impacted by 2.1 percentage points due to generic drug introductions in the last 12 months,” Walgreens reported.

Total prescriptions filled at comparable stores increased 0.8 percent.

Calendar 2008 sales were $29.71 billion, an increase of 10.4 percent over 2007. Fiscal 2008 year-to-date sales for the 10 months were $49.25 billion, up 10.1 percent from the same period last year. Comp-store sales for the fiscal year to date increased 4.4 percent.

Walgreens said it opened 50 drug stores during June, including seven relocations, acquired three stores and closed one. ?As of June 30, the company operated 6,772 locations in 49 states, the District of Columbia and Puerto Rico.

That figure includes 6,297 drug stores, 544 more than a year ago. The company also operates worksite health centers, home care facilities and specialty, institutional and mail service pharmacies. Its Take Care Health Systems subsidiary manages 183 convenient care clinics at Walgreens drug stores. Franchisees of Option Care, Inc., a wholly-owned subsidiary of Walgreens, are not included in Walgreens’ location or store count.

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