) recently announced select financial results for first quarter
fiscal 2013 along with results for the month of November.
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WALGREEN CO (WAG): Free Stock Analysis Report
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Glimpse of First Quarter Results
Walgreens reported selected results for the first quarter fiscal
2013, ending November 30. Total sales came in at $17.34 billion,
down 4.5% year over year and trailing the Zacks Consensus
Estimate of $17.63 billion, missing top-line Zacks Consensus
Estimate for the third time in a row.
Comparable store sales dipped 7.7% with prescriptions filled at
comparable stores declining 3% on a year-over-year basis. Total
prescriptions were also down 4.6% year over year. Front-end
comparable store sales decreased 2% while comparable pharmacy
sales dropped 10.8% in the first quarter.
Walgreens is slated to release first quarter fiscal 2013 earnings
on December 21, 2012.
Dismal November Results
Walgreens witnessed another dull month with November 2012 sales
declining 3.9% on a year-over-year basis to gross $5.85 billion.
Total front-end sales edged down 0.3% from November 2011 while
comparable store front-end sales decreased 1.7%. Customer traffic
in comparable stores was down 4.9% but basket size increased 3.2%
year over year.
Prescriptions filled at comparable stores at Walgreens declined
2.9% [day-fall adjusted (DFA) 2.6%] in November despite a 0.2
percentage point positive impact from the higher incidence of flu
in the month. One extra Thursday and Friday in the month with one
less Tuesday and Wednesday, led to a negative impact of 0.3
percentage points on Walgreen's prescriptions filled in November.
Total sales in comparable stores decreased 6.2% on a
year-over-year basis in November. A decline of 5.7 percentage
points due to generic drug introductions during the last 12
months as well as the negative impact of 0.2 percentage point due
to calendar day shifts were responsible for the decrease in total
comparable stores sales. It led to a 4.7% decline in Walgreens'
total pharmacy sales which accounted for the lion's share (63.2%)
of total sales in November.
Moreover, comparable store pharmacy sales were down 8.8% in
November, 9.0 percentage points of which was due to the
introduction of generic drugs in the last one year, with a 0.3
percentage point negative impact from calendar day shifts. Flu
shots administered at pharmacies and clinics season-to-date were
4.6 million, down approximately 8% year over year.
Walgreens' Balance Rewards loyalty program recorded more than 38
million registrations in the reported month. The company opened
39 stores (including 10 relocations) and closed one store in
At the end of November 2012, Walgreens operated 8,516 locations
in 50 states, the District of Columbia, Puerto Rico and Guam
including 8,057 drugstores (246 more compared with the year-ago
period). The company also operates infusion and respiratory
service facilities, specialty pharmacies and mail service
We note the company's efforts to improve the retail sale of its
mainstay prescription drugs at its stores. This is reflected in
the lower year-over-year decline of prescriptions filled at
comparable stores since June 2012. The company's new multi-year
pharmacy network agreement with
) under which Walgreen's pharmacy network has started filling
prescriptions from Express Scripts customers from September 15,
2012, should further bolster sales.
Walgreens' Balance Rewards customer loyalty program (launched in
September 2012) is gaining traction as reflected in increasing
registrations. This should improve customer traffic for
We have a long-term 'Neutral' recommendation on Walgreens, which
carries a short-term Zacks #3 Rank (Hold). Its peer
) carries a Zacks #2 Rank (Buy).