) recently reported results for the month of Sep 2013. The
company posted 8.0% year-over-year sales growth to reach $5.48
Total front-end sales increased 4.1% from the year-ago period,
while comparable store front-end sales improved 2.9%. Customer
traffic in comparable stores was down 0.8% whereas, basket size
increased 3.7% year over year.
Prescriptions filled at comparable stores at Walgreens
improved 9.6% (or up 6.7% on a calendar day-shift adjusted basis)
Express Scripts Holding Company
) customers are returning to the stores of the former.
Moreover, according to Walgreens, a calendar shift led to 2.9%
growth in prescriptions filled at its comparable stores in
Sep 2013 as the month had one additional Monday and one lesser
Saturday compared with the prior-year month.
WAG experienced a positive impact of 0.8% on comparable store
figures, owing to a year-over-year increase of flu shots. On the
other hand, prescriptions were impacted by 0.2% due to lower
incidence of flu in Sep 2013.
Total sales in comparable stores surged 7.4% on a
year-over-year basis. The calendar day shifts pulled up
comparable store sales by 1.9%.However, the generic wave in the
pharmaceutical industry during the last 12 months led to an
adverse impact of 0.5% on comparable store sales.
Walgreens' total pharmacy sales which accounted for the lion's
share (65.0%) of total sales in the reported month, improved
10.4% (or 7.3% on a calendar day-shift adjusted basis) year over
year. Calendar day shifts had a positive effect of 2.9% on
pharmacy sales. On a calendar day-shift adjusted basis, the
generic wave in the pharmaceutical industry dragged comparable
store pharmacy sales by 0.7% in September. However, more flu
shots in this month led to 0.5% rise in comparable store pharmacy
The company opened 17 stores (including 8 relocations) and
closed one store during the reported month.
As of Sep 30, 2013, Walgreens operates 8,590 locations in 50
U.S. states, the District of Columbia, Puerto Rico and Guam,
including 8,123 drugstores (77 more compared with the year-ago
period). This includes 5 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
return of Express Scripts customers following the resolution of
the earlier impasse between the two companies. However, the
generic wave in the pharmaceutical industry continues to hurt
revenues. Nevertheless, Walgreens stands to generate higher
profits from escalating sales of the higher-margin generic
Last week, the company reported a strong fourth quarter of
fiscal 2013 with earnings and revenues both remaining consistent
with the Zacks Consensus Estimate. While revenue witnessed slight
growth, earnings growth of 15.9% was quite encouraging.
Walgreens' partnership with Alliance Boots is yielding
positive results, with combined first-year synergies of $154
million, which exceeded its expectation of $125-$150 million. The
Alliance Boots deal was accretive to adjusted earnings by 8 cents
in the reported quarter, in line with management
Walgreen and Alliance Boots' strategic long-term relationship
) is also making progress, with Walgreens and AmerisourceBergen
implementing their 10-year agreement for pharmaceutical
distribution last month. Moreover, the three companies plan to
collaborate on global supply chain opportunities. Additionally,
Walgreens and Alliance Boots together possess rights to buy a
minor equity stake in AmerisourceBergen. We believe the upcoming
quarterly numbers will actually reflect whether Walgreens'
deal-making spree is paying off or not.
Currently, the stock carries a Zacks Rank #3 (Hold). While we
choose to remain on the sidelines regarding WAG, drug retailers
), carrying a Zacks Rank #1 (Strong Buy), is worth
AMERISOURCEBRGN (ABC): Free Stock Analysis
EXPRESS SCRIPTS (ESRX): Free Stock Analysis
HERBALIFE LTD (HLF): Free Stock Analysis
WALGREEN CO (WAG): Free Stock Analysis Report
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