Walgreens January Sales Decrease 2.3%

Comparable front end sales increase 1.6% from January 2011.

Walgreens had January sales of $5.80 billion, a decrease of 2.3% from $5.93 billion for the same month in fiscal 2011.

Total front-end sales increased 2.7% in January 2012 compared with the same month in 2011, while comparable store front-end sales increased 1.6%, following a 0.6% increase in December. Customer traffic in comparable stores decreased 0.6% while basket size increased 2.2%.

“We are pleased with our front-end performance in January and that front-end comparable sales increased year-over-year, demonstrating the value of Walgreens to our customers as we continue to move forward with our strategy to become America’s first choice for health and daily living,” said Walgreens President and CEO Greg Wasson.

Prescriptions filled at comparable stores decreased 8.6% in January. Calendar day shifts in January, which had one additional Tuesday and one fewer Saturday compared with January 2011, positively impacted prescriptions filled in comparable stores by 1.3%. Lower incidence of flu negatively impacted comparable prescriptions filled by 1.5%. The negative impact on comparable prescriptions filled due to no longer being part of the Express Scripts, Inc. pharmacy network on Jan. 1, 2012 was 10.6%. Prescriptions processed by Express Scripts comprised 12.4% of Walgreens prescriptions in January 2011.

“We expected that January would be a very challenging month on a comparable prescription basis because of the impacts from not being part of the Express Scripts network as of Jan. 1 and the much milder cough, cold and flu season we have been experiencing,” said Kermit Crawford, president of pharmacy, health and wellness services and solutions. “With January now behind us, we are moving forward with relationships with large and small employers, health systems, physician groups and other PBMs who value Walgreens ability to help lower overall health care costs. As we expect these relationships to grow, and as we move past the impact from this year’s weak flu season, we anticipate an improvement in the coming months in the number of comparable prescriptions filled relative to January’s result.”

The company said it now expects prescriptions filled in fiscal year 2012 to be around the low end of its previously announced range of 97-99% of prescriptions filled in fiscal year 2011. This estimate is based on various factors that are subject to change, such as  the company’s current estimate of the impact of no longer being part of the Express Scripts network (including for clients such as Tricare and WellPoint); a much weaker than expected flu season to date and expectations for that to continue; and general weakness in current industry prescription trends.

 “Based on our preliminary analysis, Medicare Part D plans with Walgreens in their network gained market share on average, while those without Walgreens lost market share. Importantly, we were very pleased to see that those plans that included Walgreens grew nearly twice as fast on average as those Medicare Part D plans without Walgreens,” Crawford said.

Also today, Walgreens reported the results of its January promotion of one-year memberships in its Prescription Savings Club. The promotion resulted in a record signup of more than 700,000 new memberships. The program offers savings on more than 8,000 brand name and all generic medications. For more than 400 generic medications, Walgreens offers a three-month supply for less than $1 a week.

As for January sales results, pharmacy sales decreased 6%, while comparable pharmacy sales decreased 7.9%. Calendar day shifts positively impacted pharmacy sales in comparable stores by 1.3%. Comparable pharmacy sales were negatively impacted by 2.1% due to generic drug introductions in the last 12 months, by 2.4% due to lower incidence of cough, cold and flu and by 10.6% due to no longer being part of the Express Scripts network as of Jan. 1. Pharmacy sales accounted for 63.6% of total sales for the month.

Flu shots administered at pharmacies and clinics season-to-date were 5.5 million versus 6.3 million last year.

Sales in comparable stores (those open at least a year) decreased 4.6%. The effect of calendar day shifts positively impacted total comparable sales by 0.8%.

Fiscal 2011 year-to-date sales for the first five months were $30.94 billion, up 2.9% from $30.08 billion in the comparable period in fiscal 2011.

Walgreens opened 14 stores during January, including two relocations.

At Jan. 31, Walgreens operated 8,270 locations in all 50 states, the District of Columbia, Puerto Rico and Guam. That includes 7,830 drugstores, 161 more than a year ago, including 21 stores acquired over the last 12 months. The company also operates home care facilities and specialty and mail service pharmacies. Its Take Care Health Systems subsidiary manages more than 700 in-store convenient care clinics and worksite health and wellness centers.

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