Walgreens April sales solid despite front-end dip

DEERFIELD, Ill. — Walgreens posted April sales of $6 billion, an increase of 3.8% as compared to the same month in fiscal 2012.

Total front-end sales decreased 2.9%, while comparable store front-end sales decreased 4.3%. Customer traffic in comparable stores decreased 5.9% while basket size increased 1.6%.

"The shift in Easter should have a material negative impact on the front-end sales of the drug stores in April, but we believe the difficult underlying trends that have settled in for some time now likely continued," suggested Ed Kelly, Credit Suisse research analyst, in a note published Wednesday. "Our monthly Nielsen trend-tracker indicated that sales were flat in the drug store channel for the four-week period ending April 13, with volumes down roughly 3%. In our view, drug stores are losing share to lower priced competitors (e.g. mass, dollar stores priced around 25% to 30% below drug stores), particularly as weakened consumers focus on value," Kelly wrote. "[And] changes in Walgreens’ promotional program when it launched a loyalty card have also caused issues at this company."

For the combined March/April period that includes the Easter holiday season, comparable store front-end sales decreased by 0.2%, while customer traffic in comparable stores decreased 4% and basket size increased 3.8%.

Prescriptions filled at comparable stores increased by 9.7% in April and increased 6.3% on a calendar day-shift adjusted basis. This year’s April had one additional Tuesday and one fewer Sunday compared with April 2012.

These calendar shifts positively impacted both comparable pharmacy sales and prescriptions filled at comparable stores by 3.4 percentage points.

April pharmacy sales increased by 7.3%, while comparable store pharmacy sales increased 4.7% and increased by a calendar day-shift adjusted 1.3%.

Pharmacy sales accounted for 64.5% of Walgreens' total sales for the month.

Sales in comparable stores increased by 1.2% in April. Calendar day shifts positively impacted total comparable sales by 2.2 percentage points, while generic drug introductions in the last 12 months negatively impacted total comparable sales by 2.6 percentage points.

Sales for the combined months of March and April 2013 increased 3% from the same two months in 2012. Comparable store sales for the March/April period increased 0.8%.