Walgreens has reported a first quarter earnings increase of 68.3% to $695 million compared to $413 million in last year’s first quarter. The company reported that total first quarter sales reached a record $18.3 billion.
For the first quarter ended November 30 of its 2014 fiscal year, Walgreens also posted that front-end comparable sales increased 2.4%, customer traffic increased 0.2%, basket size increased 2.2% and total sales in comparable stores increased 5.4%. Additionally prescription sales, which accounted for 64.7% of sales in the quarter, increased 7.3% boosting the retailer’s prescription market share 50 basis points from a year ago to 19.4%.
“Given the continued soft economy, we were generally satisfied with our top-line growth where we increased both traffic and sales for the quarter as well as our pharmacy market share,” Walgreens president and CEO Greg Wasson said. “However, the year-over-year negative impact related to generics, including the significant shift in the generic wave from a peak a year ago to a trough this quarter as well as our strategic decision to make meaningful promotional investments in our daily living business, affected our margins for the quarter. That said, by continuing our strong focus on managing our expenses, we were able to continue growing gross profit dollars faster than costs during the quarter.”
In its financial report, the company highlighted three key strategies for advancing in the first quarter which included creating the Well Experience (such as its Balance Rewards loyalty program) including the opening or converting 87 Well Experience stores to bring the total of this format to 600; Transforming Community Pharmacy (such as administering immunizations and forming strategic partnerships with local medical units); and Establishing an Efficient Global Platform, which includes launching new product brands and advancing its digital strategy and Alliance Boots initiatives.
“In the second quarter, we will be taking further steps to balance front-end sales and margin,” said Wasson. “In terms of pharmacy margin, we expect the effect of the trough in the generic wave to be similar to the first quarter while moderating during the balance of the fiscal year. We also expect our results related to seasonal flu next quarter to reflect comparisons to the same period last year, which was one of the most active flu seasons in the last 15 years. We will continue our sharp focus on expense management as we address the challenging environment, and we expect to realize the synergies from our strategic partnership consistent with our previously stated goal.”
Walgreens operates 8,681 locations in all 50 states, the District of Columbia, Puerto Rico, Guam and the U.S. Virgin Islands. The company has 8,200 drugstores nationwide including Duane Reade stores, 142 more than a year ago.