Walgreens reports positive July sales

Front end continues to see improvement

DEERFIELD, Ill. — Walgreens on Wednesday reported July sales of $5.82 billion, an increase of 4.7%.

Total front-end sales increased 6.8% in July, while comparable front-end sales increased 4.8%. Customer traffic in comparable stores increased 1.4% and basket size increased 3.4%. According to Credit Suisse research analyst Ed Kelly, improved front-end trends across the drug channel are sustainable in the current economic environment because pharmacy operators historically have been able to pass along inflation without impacting volume, and convenient corner locations serve to neutralize any impact from rising gas prices.

Shares of Walgreens stock, however, were trading some 30 cents below Tuesday's close at $37.54 in early morning trading; though that's more likely a reflection of Walgreens' announcement earlier this year that the chain will walk away from the Express Scripts pharmacy network beginning January 2012 due to unfavorable terms.

Prescriptions filled across comparable pharmacies increased 1.3% in July, Walgreens reported. Calendar day shifts in July, which had one additional Sunday and one fewer Thursday, compared with July 2010, negatively impacted prescriptions filled in comparable stores by 220 basis points.

July pharmacy sales increased 2.7%, while comparable pharmacy sales increased 1.5%. In addition to the 220 basis-point impact due to calendar day shifts, same-store pharmacy sales also were negatively impacted by 190 basis points, due to generic drug introductions in the last 12 months. Walgreens' pharmacy sales accounted for 64.5% of total sales for the month.

Sales in comparable stores increased 2.7%; the effect of calendar day shifts negatively impacted total comparable sales by 140 basis points.

Calendar year-to-date sales were $41.9 billion, an increase of 7.3%.

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