Key Walgreen metric climbs 3.2 percent in November
Deerfield-basedWalgreen Co.’s revenue from established stores rose 3.2 percent last month compared to November 2012, when a wave of generic drugs hurt the top-line of the nation’s largest drugstore chain.
The company said Wednesday that its pharmacy sales climbed 4 percent, while revenue from the rest of its stores rose 1.9 percent, thanks in part to more promotions.
The overall figure matched average analyst expectations, while Wall Street forecast 3.9 percent growth from the pharmacy and a 1.8 percent advance from the front end, according to Thomson Reuters.
Revenue from stores open at least a year is a key indicator of retailer health because it leaves out potentially distorting results from locations that have opened or closed.
Walgreen and other drugstores were hit with a wave of generic drugs last year that affected sales. Generic drugs can hurt pharmacy revenue because they cost less than their brand-name counterparts. But they also boost profitability because they come with a wider margin between the cost for the pharmacy to purchase the drugs and the reimbursement it receives.
Walgreen also said a “meaningful increase” in promotions helped bring more customers into its established stores last month and increased front-end sales. CEO Greg Wasson said earlier this year that improving front-end sales was a top priority after the company reported soft results.
The company also doled out more flu shots last month compared to November 2012, and its revenue rose despite a calendar shift that gave it one additional Saturday and one less Thursday. Drugstores get more business on weekdays, when customers are more likely to see a doctor and fill a prescription, than they are during the weekend.
Overall, Walgreen booked $18.35 billion in revenue during its fiscal first quarter, which ended Nov. 30. That’s a 6 percent increase compared to last year. The drugstore chain will detail its performance in the quarter on Dec. 20.
Walgreen operated 8, 197 drugstores at the end of the quarter.
Company shares slipped 50 cents to $58.20 in morning trading Wednesday, while broader indexes also fell slightly. Walgreen’s stock is still up 57 percent so far this year.