Tuesday June 5th, 2012 - 2:13PM
May sales at Walgreens decreased 1.6% to $5.98 billion versus the same month in fiscal 2011 as comparable front-end sales, including general merchandise, fell by 1% and comparable store pharmacy sales decreased by 8.5%. Overall, sales in comparable stores decreased by 5.8%.
Total front end sales increased 0.3% compared with the same month in 2011, while pharmacy sales decreased 3.9%, the company stated.
Customer traffic in comparable stores decreased 2.3%, Walgreens said, while basket size increased 1.3%.
The termination of business with Express Scripts, Inc. was primarily responsible for the losses in pharmacy sales, the retailer noted, although generic introductions were impacted as well.
In a research note, Mark Wiltamuth, a Morgan Stanley analyst, said a weak front-end comp could be a sign that the Walgreen dispute with Express Scripts “is having impact on the front end. While Walgreens believes that displaced Express Scripts customers will still use Walgreens for front-end purchases, this weak comp, held up against the strength in the CVS first quarter front-end, plus 5.3%, suggests that customers may be changing their shopping patterns.”
For its part, Walgreens sees itself meeting the problem of operating without reference to Express Scripts. Walgreens executive vp and CFO Wade Miquelon said, “Since January 1, our underlying trend for number of prescriptions filled has improved. Looking forward, we expect our number of prescriptions filled to be helped as employers and health plans take a variety of steps… to provide continued access to Walgreens and our services. In addition, we extended our multi-year agreement to build on our strategic partnership with OptumRx, one of the largest pharmacy benefit managers in the United States.”
Walgreens opened seven stores in May, including one relocation, and acquired 28 Bioscrip community pharmacies.
As of May 31, Walgreens operated 8,341 locations in all 50 of the United States as well as the District of Columbia, Puerto Rico and Guam, the company stated. The total includes 7,889 drugstores, 175 more than a year ago, including 48 stores acquired over the past 12 months.