Drugstore chain Walgreen Co. (WAG) on Monday reported a 5.9 percent decline in comparable store sales for October, while total sales decreased 2.1 percent. The company's results continued to be negatively impacted by generic drug introductions in the last twelve months.
Walgreens' results in the past few months have been negatively impacted by its exit from Express Scripts, Inc. (ESRX) pharmacy network from January this year. However, Walgreens and Express Scripts have settled their disputes and entered in to a new multi-year pharmacy network agreement that is effective from September 15.
Deerfield, Illinois-based Walgreens reported that its total sales for the month of October declined 2.1 percent to $6.00 billion from $6.13 billion in the same period last year. The latest period includes the impact of Hurricane Sandy through October 31.
Comparable store sales, or sales at stores open for at least a year, decreased by 5.9 percent in October.
Walgreens noted that calendar day shifts positively impacted total comparable sales by 2.3 percentage points, while generic drug introductions in the last 12 months negatively impacted total comparable sales by 5.8 percentage points.
Total front-end sales in October declined 1.5 percent year-over-year, while comparable store front-end sales declined 2.9 percent. Customer traffic in comparable stores decreased 5.2 percent while basket size increased 2.3 percent.
Wade Miquelon, Chief Financial Officer and President, Walgreens International said, "Our strategic decision not to pursue unprofitable promotions resulted in solid margins for the month as we continue to focus on gross profit dollar growth."
Total prescriptions filled at comparable stores for October declined 1.8 percent and by a day-fall adjusted or DFA of 5.4 percent. This year's October had one additional Tuesday and Wednesday and one fewer Saturday and Sunday compared with last year, positively impacting prescriptions filled in comparable stores by 3.6 percentage points.
DFA prescriptions filled at comparable stores also were positively impacted by 0.2 percentage point, due to the higher incidence of flu in this year's October. These results also include the storm impact.
Walgreens noted that at the peak of the storm, about 750 of its 1,400 stores in the impacted area were closed. However, nearly all of those locations have since reopened.
Pharmacy sales for the month decreased 2.6 percent and comparable store pharmacy sales decreased 7.5 percent.
The company noted that calendar day shifts positively impacted pharmacy sales in comparable stores by 3.6 percentage points. Meanwhile, DFA comparable store pharmacy sales were negatively impacted by 9.0 percentage points due to generic drug introductions in the last twelve months. Pharmacy sales represented 64.8 percent of total sales for the month.
Registrations for Walgreens Balance Rewards loyalty program, which launched in September, totaled more than 28 million through October 31.
The company's fiscal 2013 year-to-date sales for the two months declined 4.9 percent to $11.48 billion from $12.07 billion in fiscal 2012.
WAG closed Friday's trading at $34.89, down $0.61 on a volume of 8.84 million shares.
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