) recently disclosed its sales data for the month of Feb.
Walgreens also reported sales for the second quarter of fiscal
2013, ending Feb 28. Total sales came in at $18.63 billion, down
0.1% year over year and trailing the current Zacks Consensus
Estimate of $18.91 billion, missing top-line Zacks Consensus
Estimate for the fourth time in a row.
Walgreens is slated to release second quarter fiscal 2013
earnings later this month.
Walgreens suffered a setback after improving monthly results in
Jan as Feb sales declined 2.2% on a year-over-year basis to $5.75
billion. However, the dull results can be attributed to one extra
day of the leap year in Feb 2012. Excluding this impact, sales in
Feb 2013 inched up 1.5%.
Total front-end sales edged down 3.1% (flat excluding the
leap-year impact) compared with the year-ago period, while
comparable store front-end sales declined 1.4%. Customer traffic
in comparable stores was down 4.9% although basket size increased
3.5% year over year.
Prescriptions filled at comparable stores at Walgreens improved
6.5% in the reported month on the heels of a 0.1 percentage point
positive impact from the higher incidence of flu. According to
the company, flu shot administration did not affect the
comparable store sales in Feb 2013.
Total sales in comparable stores dipped 0.6% on a year-over-year
basis. A decline of 3.7 percentage points was attributable to
generic wave in the pharmaceutical industry during the last 12
The introduction of generic drugs also led to a 2.1% decline in
Walgreens' total pharmacy sales which accounted for the lion's
share (61.9%) of total sales in Feb. Comparable store pharmacy
sales remained flat despite the adverse impact of 2.3 percentage
points due to the generic wave. Flu shots administered at
pharmacies and clinics season-to-date were about 7.0 million, up
approximately 27% year over year.
To date, Walgreens' Balance Rewards loyalty program (launched on
Sep 2012) has recorded roughly 60 million registrations. The
company opened 11 stores and closed one during the month.
As of Feb 28, 2013, the company operated 8,539 locations in 50
states, the District of Columbia, Puerto Rico and Guam, including
8,071 drugstores (231 more compared with the year-ago period).
The company also operates infusion and respiratory service
facilities, specialty pharmacies and mail service facilities.
Walgreens' second quarter was the first full quarter to include
the benefit from the return of
) customers following the resolution of the earlier impasse
between the two companies. Despite the upside, Walgreens reported
another quarter of lean sales.
Not only did the top-line result lag the year-ago mark, it
failed to meet our expectations. Market sentiments also slipped
due to the disappointing results as stock price declined 2.51%
(or $1.05) to close at $40.72 on Mar 5, 2013.
CARDINAL HEALTH (CAH): Free Stock Analysis
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WALGREEN CO (WAG): Free Stock Analysis Report
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As expected by Walgreens, the pharmacy business continues to slow
down as the generic wave continues to hurt franchise revenues. In
the interim, the company's strategy of reviving growth of its
front-end stores is paying off. However, we believe that
competitive industry conditions and tough current business
environment prevail for Walgreens.
The stock carries a Zacks Rank #3 (Hold). While we remain on the
sidelines for Walgreens, we are bullish on
), each carrying a Zacks Rank #2 (Buy).