), or Walgreens, recently reported results for the month of Nov
2013. The company posted 4.1% year-over-year sales growth to
reach $6.07 billion.
Total front-end sales increased 3.2% from the year-ago period,
while comparable store front-end sales improved 1.9%. Customer
traffic in comparable stores was up 0.8% whereas, basket size
increased 1.1% year over year.
Prescriptions filled at comparable stores at Walgreens
improved 1.4% (or up 3.7% on a calendar day-shift adjusted
basis). According to Walgreens, a calendar shift led to 2.3%
decline in prescriptions filled at its comparable stores in
Nov 2013 as the month had one additional Saturday and one lesser
Thursday than the comparable prior-year month.
Walgreens experienced a positive impact of 0.4% on
prescriptions filled at comparable stores owing to a
year-over-year increase of flu shots. On the other hand,
prescriptions were impacted by 0.7% due to lower incidence of flu
in Nov 2013.
Total sales in comparable stores surged 3.2% on a
year-over-year basis. The calendar day shifts pulled down
comparable store sales by 1.5% while the generic wave in the
pharmaceutical industry during the last 12 months led to an
adverse impact of 0.6% on comparable store sales.
Walgreens' total pharmacy sales, which accounted for the
lion's share (63.5%) of total sales in the reported month,
improved 4.7% (or 6.3% on a calendar day-shift adjusted basis)
year over year. Calendar day shifts had a negative effect of 2.3%
on pharmacy sales. On a calendar day-shift adjusted basis, the
generic wave in the pharmaceutical industry dragged comparable
store pharmacy sales by 1.0% in November. However, more flu shots
in this month led to a rise of 0.2% in comparable store pharmacy
The company opened 22 stores (including 9 relocations) and
closed one during the reported month.
As of Nov 30, 2013, Walgreens operates 8,677 locations in 50
U.S. states, the District of Columbia, Puerto Rico and Guam,
including 8,197 drugstores (140 more than the year-ago period).
This includes 59 net stores acquired over the last year. The
company also operates infusion and respiratory service
facilities, specialty pharmacies and mail service facilities.
As expected, Walgreens recorded plump sales with increasing
) customers following the resolution of the earlier impasse
between the two companies. However, the generic wave in the
pharmaceutical industry continues to hurt revenues. Nonetheless,
Walgreens is poised to generate higher profits from escalating
sales of higher-margin generic drugs. Walgreens is also
positioned on a healthy dividend growth track. Further, the
customer loyalty program is gaining traction as reflected in
increasing registrations. This should improve customer traffic
We also look forward to synergies from the Alliance Boots
deal. The deal with
), likely to create a leader in the generic and branded drug
purchasing space, is another major upside. Walgreens is
optimistic about financial and operational benefits from the deal
for fiscal 2014, with margin expansion and bottom-line accretion.
Evidently, management seems to have chalked out a number of
strategic initiatives to revive growth for the company.
Currently, the stock carries a Zacks Rank #3 (Hold). While we
choose to remain on the sidelines regarding WAG, drug retailer
), carrying a Zacks Rank #2 (Buy), is worth considering.
AMERISOURCEBRGN (ABC): Free Stock Analysis
EXPRESS SCRIPTS (ESRX): Free Stock Analysis
HERBALIFE LTD (HLF): Free Stock Analysis
WALGREEN CO (WAG): Free Stock Analysis Report
To read this article on Zacks.com click here.