Walgreens sales up 4.9% despite new generics

Despite revenue losses from the introduction of new generic drugs, Walgreens announced that same store sales grew 4.5% in November, with total sales, including stores open less than a year, also increasing 4.9% from last year.

The company posted November sales of $6.4 billion, an increase of 4.9% from the prior year. Same store sales across the pharmacy increased by 6.7% and front-end same-store sales were up 0.8%.

The company said new, cheaper generic drug introductions have negatively impacted same store sales by 1.3 percentage points in the past 12 months. Calendar shifts also impacted total same store sales by 1.3% points for the month.

Overall, November pharmacy sales increased by 7.6% and increased by a calendar day-shift adjusted 8.7%. Prescriptions filled at comparable stores increased by 2.6% in November and increased 4.6% on a calendar day-shift adjusted basis. This year's November had one additional Sunday and one fewer Friday compared with November 2013. Prescription growth was in line with the industry; average script growth through the first two weeks of November was up 2.8%, Credit Suisse reported citing IMS Health data.

"Flu activity is similar to where it was at this time last year," noted Ed Kelly, Credit Suisse research analyst. "Flu shots may provide a modest tailwind to comps." Flu shots administered at Walgreens pharmacies and clinics season to date were nearly 14.8%.

Calendar day shifts negatively impacted pharmacy sales in comparable stores by 2 percentage points. Calendar day-shift adjusted comparable store pharmacy sales were negatively impacted by 1.9 percentage points due to generic drug introductions in the last 12 months, and were positively impacted by 0.1 percentage points due to more flu shots versus last year. Pharmacy sales accounted for 65.2% of total sales for the month.

Total front-end sales increased 1.3% compared with the same month in fiscal 2014. Customer traffic in comparable stores decreased 3.3% while basket size increased 4.1%. Sales in comparable stores increased by 4.5% in November.

Calendar day shifts negatively impacted total comparable sales by 1.3 percentage points, while generic drug introductions in the last 12 months also negatively impacted total comparable sales by 1.3 %age points. Total sales for the first quarter of fiscal 2015, which ended Nov. 30, were $20 billion, up 6.8%.

Comparable store sales for the first quarter of fiscal 2015 increased 5.8%, while front-end comparable store sales for the quarter increased 1.5%. Prescriptions filled at comparable stores increased 4.2% in the first quarter and comparable pharmacy sales increased 8.3%.

Calendar 2014 sales to date were $70.5 billion, an increase of 6% from $66.52 billion in 2013. Walgreens opened 24 stores during November, including 12 relocations, and closed one.

Source: Retailing Today