Flu activity to drive pharmacy comps
NEW YORK — The flu may drive consumers to bed, but drug store sales are expected to benefit from an increase in flu activity, according to a Credit Suisse research note.
Credit Suisse research analyst Edward Kelly on Monday noted that as Walgreens and Rite Aid would report their monthly sales on March 3, comparable pharmacy sales would be driven by increased flu activity.
"As of Feb. 19, [the Centers for Disease Control and Prevention] reported that 4.8% of patients visiting healthcare centers in February displayed flu-related symptoms, versus 2% last year and 3.6% in January. IMS script data supports this view, as volume improved 4.5% in the previous four weeks ended Feb. 18, versus being flat during the same period last year," Kelly wrote.
Similarly, Kelly said that drug stores also should expect solid gains on the front end, thanks to the flu activity boost and early inflation.
Looking ahead, Kelly projected that both Walgreens and Rite Aid, respectively, would see a 4.5% increase in February comparable sales versus consensus of 3.3%, and a 1.5% to 2% increase in comparable sales versus consensus of 0.5%. For Walgreens, Kelly wrote, "[we] project a 5% gain in pharmacy (no calendar shift this month), which includes a 150 basis points benefit from increased flu activity," as well as a 3.5% comp increase for the retailer's front end. As for Rite Aid, "the company should benefit from easier comparisons in both the front-end and pharmacy," Kelly added, with an expected increase of 1.5% in pharmacy comparable sales and a 2.5% increase in front-end sales, thanks to increased traffic from the chain's loyalty program, Wellness+.