) recently disclosed exhaustive results for the month of Apr
2013. The company posted another month of sales improvement after
March as April sales inched up 3.8% year over year to $5.98
However, total front-end sales declined 2.9% compared with the
year-ago period, while comparable store front-end sales decreased
4.3%. These numbers are a stark contrast from the Mar 2013
results when Walgreens posted improvement in total and comparable
store front-end sales. Customer traffic in comparable stores was
down 5.9% although basket size increased 1.6% year over year.
For the combined period of March and April that includes the
Easter holiday season, comparable store front-end sales dipped
0.2%. Customer traffic decreased 4% while basket size increased
Prescriptions filled at Walgreens' comparable stores increased
9.7% in the reported month on the heels of increasing return of
) customers to pharmacies. The calendar shifts of an additional
Tuesday and one less Sunday led to a positive impact of 3.4
percentage points despite the exclusion of Easter holiday (Mar
31) from the reported month. After accounting for these calendar
shifts, prescriptions filled shot up 6.3%.
Total sales in comparable stores rose 1.2% on a year-over-year
basis. An improvement of 2.2 percentage points was attributable
to calendar day shifts while generic introduction in the
pharmaceutical industry during the last 12 months hampered
comparable store sales by 2.6 percentage points.
Walgreens' total pharmacy sales which accounted for the lion's
share (64.5%) of total sales in the reported month improved 7.3%
year over year. Comparable store pharmacy sales increased 4.7%
due to the positive impact of 3.4 percentage points from calendar
shifts. The generic wave in the pharmaceutical industry had a
negative impact of 4.1 percentage points on calendar day-shift
adjusted comparable store pharmacy sales. Adjusting for calendar
shifts, comparable store pharmacy sales increased 1.3%.
To date, Walgreens' Balance Rewards loyalty program (launched in
Sep 2012) has recorded over 68 million registrations. The company
opened 14 stores (including 4 relocations) and closed one during
As of Apr 30, 2013, Walgreens operated 8,550 locations in all 50
states, the District of Columbia, Puerto Rico and Guam, including
8,086 drugstores (231 more compared with the year-ago period with
99 net stores acquired during the last 12 months). The company
also operates infusion and respiratory service facilities,
specialty pharmacies and mail service facilities.
With two consecutive months of sales improvement, it seems like
Walgreens is gaining positive momentum. The benefits of the
return of Express Scripts customers are reflected in the pharmacy
store sales growth. Going forward, we expect Walgreens to gain
further from the resolution of the earlier impasse between the
On the tepid side, the generic wave continues to hurt revenues.
Also, Walgreens' front-end stores sales declined in the month.
As a result, the stock carries a Zacks Rank #3 (Hold). While we
have a neutral stance on Walgreens,
Rite Aid Corporation
), carrying a Zacks Rank #2 (Buy) warrant a look.
CVS CAREMARK CP (CVS): Free Stock Analysis
EXPRESS SCRIPTS (ESRX): Free Stock Analysis
RITE AID CORP (RAD): Free Stock Analysis
WALGREEN CO (WAG): Free Stock Analysis Report
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