Walgreens pushes April sales up modestly, but early Easter, generics pressure results

DEERFIELD, Ill. An earlier-than-usual Easter sales season put a drag on sales at Walgreens’ more than 6,200 drug stores in April, with sales for the month rising 7.9 percent over the same month last year but same-store sales up an anemic 1.6 percent. Comp-store front-end sales actually declined by 3.1 percent, the company reported today.

Total sales were $8.45 billion in April, Walgreens said, with pharmacy sales up 10.8 percent for the month vs. last year, and comp-store pharmacy sales rising 4.2 percent. “Comparable pharmacy sales were negatively impacted by 3.7 percentage points due to generic drug introductions in the last 12 months,” Walgreens reported.

Total prescriptions filled at comparable stores increased 2.7 percent.

Overall, April sales were hurt by the fact that Easter fell in March this year compared with an April Easter in 2007, according to the company. A truer picture of Walgreens’ performance comes by combining sales for March and April, the company asserted, when sales rose 9.2 percent over the same two months in 2007. Comparable store sales for the March/April period rose 3.0 percent, while comparable store front-end sales for the combined months increased 4.0 percent.

“We remain cautious on Wag, as a weak macro environment may put pressure on sales and expense management,” noted retail analyst Deborah Weinswig of Citi Investment Research, a division of Citigroup Global Markets. Reacting to Walgreens’ April numbers in a May 2 report, she said that pressure on operating costs could also “potentially compromise service quality” at the nation’s top drug chain.

Besides the impact of an early Easter, Weinswig also cited pressure from the replacement of big-selling prescription drugs like Zyrtec with lower-priced generic and OTC versions. Those generics, she noted, “continue to negatively impact pharmacy sales.”

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