DEERFIELD, Ill. A weak start to the holiday sales season, a rise in lower-price generic drug introductions, pressures on children’s cough-cold products and other factors combined to slow the growth momentum at Walgreen Co. in November, but the company still eked out modest same-store sales gains amid the uncertainty.
Walgreens reported November sales of $4.77 billion, marking a 9.5 percent increase over the same month in 2006. But sales in comparable stores rose just 4.4 percent.
Pharmacy sales rose 10.6 percent, but the replacement of some big-selling brand name drugs with lower-price generics this year held comp-store pharmacy sales to a 5.5 percent gain—modest by Walgreens standards. “Comparable pharmacy sales were negatively impacted by 4.3 percentage points due to generic drug introductions in the last 12 months,” the company reported today.
Total prescriptions filled at stores open more than a year increased 3.1 percent, Walgreens noted, and pharmacy sales accounted for 65.1 percent of total sales for the month.
At the front end, comp-store sales rose a relatively meager 2.6 percent in November. Walgreens attributed the growth slowdown to “weakness in seasonal categories; aggressive pricing on digital photo prints; the withdrawal from the market and cautions on the use of cough and cold products for children 6 and under; and a mild early flu season compared to last year.”
Among the bright spots at the front end: consumables and everyday electronics, the company reported.
“Although the weak economic environment may have impacted early holiday sales, we believe the economy will benefit drug stores late in the Christmas season as customers take advantage of our wide selection of products and our convenient locations,” said Walgreens chairman and chief executive officer Jeff Rein. “That’s typical of our past experience.”
Rein also pointed out that the specials offered in Walgreens’ circular advertising in November “didn’t offer the deep discounts that other retailers promoted.”
Calendar year-to-date sales were $49.95 billion, an increase of 11.7 percent over the same period last year. For the first quarter of fiscal 2008 ended Nov. 30, Walgreens’ same-store sales rose 5.4 percent, with total sales up 10.2 percent from first-quarter 2006, to $14.0 billion.
Walgreens said it opened 95 stores in November, including eight relocations. The company also acquired three stores and closed eight, ending the month with 6,141 drug stores (including 93 home care division locations, 10 specialty pharmacies and three mail service facilities) in 49 states and Puerto Rico, versus 5,580 a year ago. Franchisees of Option Care, a wholly owned subsidiary of Walgreens, are not included in Walgreens’ store count.