) recently reported exhaustive results for the month of May 2013.
CVS CAREMARK CP (CVS): Free Stock Analysis
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WALGREEN CO (WAG): Free Stock Analysis Report
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Walgreens also reported sales for the third quarter of fiscal
2013, ending May 31. Total sales came in at $18.34 billion, up
3.3% year over year and trailing the current Zacks Consensus
Estimate of $18.54 billion, missing top-line Zacks Consensus
Estimate for the fifth time in a row.
Comparable store sales inched up 1.3% year over year.
Prescriptions filled at Walgreens' comparable store increased 7%
year over year. On the other hand, comparable pharmacy sales
increased 2% year over year.
Front-end comparable store (those open for more than a year)
sales clambered 0.3% in the third quarter. This is a stark
contrast from the second quarter result when front-end comparable
store sales decreased 2.6%
Walgreens posted another month of sales improvement as May sales
rose 4.3% year over year to $6.22 billion. This marks the third
consecutive month of sales growth for the company.
Total front-end sales increased 3.4% compared with the year-ago
period, while comparable store front-end sales improved 1.2%.
Customer traffic in comparable stores was down 3.5% although
basket size increased 4.7% year over year.
Prescriptions filled at comparable stores at Walgreens improved
7.1% (or 7.5% on a calendar day-shift adjusted basis) on the
heels of increasing return of
Express Scripts Holding Company
) customers along with a 0.2% positive impact from flu shots.
According to the company, calendar shifts adversely affected
prescriptions filled at its comparable stores by 0.4% as May 2013
had one additional Friday and one lesser Tuesday compared with
the prior-year month.
Total sales in comparable stores increased 2.8% on a
year-over-year basis. However, the generic wave in the
pharmaceutical industry during the last 12 months led to an
adverse impact of 2.3% on comparable store sales. The calendar
day shifts dragged comparable store sales by 0.3%. Flu shots had
a positive impact of 0.1% on comparable store sales in the month.
Walgreens' total pharmacy sales which accounted for the lion's
share (63.1%) of total sales in May improved 4.4% year over year.
Comparable store pharmacy sales increased 3.8% despite the
adverse impact of 0.4% due to calendar day shifts. On a calendar
day shift adjusted basis, the generic wave in the pharmaceutical
industry dragged comparable store pharmacy sales by 3.7% in May.
To date, Walgreens' Balance Rewards loyalty program (launched on
Sep 2012) has recorded over 72 million registrations. The company
opened 13 stores (including 2 relocations) and closed one during
As of May 31, 2013, Walgreens operated 8,560 locations in 50
states, the District of Columbia, Puerto Rico and Guam, including
8,096 drugstores (207 more compared with the year-ago period).
The company also operates infusion and respiratory service
facilities, specialty pharmacies and mail service facilities.
Walgreens continued its positive monthly sales momentum in May.
However, the quarterly sales lagged the Zacks Consensus Estimate
despite the benefits of increasing return of Express Scripts
Although the third quarter was the second full quarter to include
the benefits of the resolution of the impasse between the two
companies, Walgreens' sales trailed expectations. Generic wave
also continues to hurt revenues.
The company also faces tough industry conditions and competitive
headwinds. The tussle to gain market share continues as
) still retains 60% of the scripts gained during the impasse.
This puts Walgreens in a tight spot.
Walgreens is slated to release third-quarter fiscal 2013 earnings
later this month. However, estimate revision trend for quarter
reflect bearish sentiment. As a result, the stock carries a Zacks
Rank #4 (Sell).
While we prefer to avoid Walgreens, CVS Caremark, carrying a
Zacks Rank #2 (Buy) warrants a look. Drug retailer
Rite Aid Corporation
) also holds a Zacks Rank #2 and is worth considering.