WAG’s June sales beat analyst expectations

BY Michael Johnsen

DEERFIELD, Ill. — Walgreens’ stock was trading up 30 cents to $43.03 on the New York Stock Exchange mid-morning on Wednesday thanks to favorable same-store sales growth of 4.8% for the month of June versus an analyst consensus estimate of 2.8%.

Much of that sales growth can be traced to the front-end, as Walgreens posted 4.7% increased sales across comparable stores against tougher year-over-year comparisons. Before Walgreens reported June sales, Credit Suisse analyst Ed Kelly projected a 3% same-store sales increase driven by re-inflation and improving customer traffic. “We believe sales will continue to improve throughout the year [across the drug channel], as drug stores pass through product cost inflation without a meaningful impact to volume,” Kelly said.

Overall, Walgreens reported June sales of $6 billion, up 6.8% as compared with last year. Total front-end sales were up 6.4%. In addition to the 4.7% front-end same-store sales lift, customer traffic in comparable stores increased 1.3% and basket size increased 3.4%.

Prescriptions filled at comparable stores were up 5% across the Walgreens network in June. Calendar day shifts positively impacted prescriptions filled in comparable stores by 30 basis points, Walgreens reported. Kelly pointed to higher pricing on branded drugs and a lull in the generic wave as additional driving factors of prescription growth. “Underlying script growth has remained lackluster since flu activity decelerated in April,” he wrote in a research note released last week. “Total script growth, as reported by IMS, averaged just 1% in the last four weeks ended June 17 v. 2%-3% earlier in the year.”

June pharmacy sales across Walgreens increased 6.2%, while comparable pharmacy sales increased 4.9%. Pharmacy sales accounted for 65.6% of total sales for the month.

Walgreens opened 15 stores during June, including two relocations, acquired seven stores and closed one for a net increase of 19 stores in the month.


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