Flu program, overhaul fuel WAG results

DEERFIELD, Ill. —A well-orchestrated flu shot campaign and the early fruits of a massive retail overhaul program helped propel Walgreens to record earnings results in first quarter 2010.

Net income jumped 19.6% over the same period last year in the quarter ended Nov. 30, 2009, to $489 million. That included a charge of 3 cents per share in restructuring and related costs associated with the company’s “Rewiring for Growth” initiative, Walgreens reported.

Same-store sales were up 4.9% in the quarter—a respectable gain in the current economic climate—with front-end same-store sales up 2.7%. Powering a 6.1% rise in same-store prescription sales was a 12% jump in the number of prescriptions filled by Walgreens pharmacists, compared with the same period a year ago. Total sales rose 9.5% over prior-year levels, to $16.4 billion.

“We remain confident we can continue to generate strong cash flow, which provides us the financial strength and flexibility to continue investments in our core strategies while returning cash to shareholders,” Walgreens president and CEO Greg Wasson said.

In September 2009, the company launched its largest immunization campaign in history, administering more than 5 million flu shots by the end of November, compared with 1.2 million in the entire previous flu season. The program attracted “many new patients” to Walgreens pharmacies, the company noted.

“Our seasonal flu shot program was one of the best-executed initiatives in my 30 years at Walgreens,” Wasson said. “We see big opportunities to deliver preventive services, including pharmacist-delivered immunizations and vaccinations, as we continue to expand our capabilities.”

To that end, Walgreens announced Jan. 4 that the once-scarce H1N1 vaccine now is available daily at all of the more than 7,100 Walgreens pharmacies and 350 Take Care Clinics throughout the country, at a cost of $18.

Wasson said Walgreens continues to focus on three core strategies in fiscal 2010: leveraging its 50-state network of drug stores, clinics and corporate pharmacies; enhancing customer satisfaction; and driving cost reductions and productivity gains.

Walgreens opened or acquired 172 new drug stores in the first quarter for a net gain of 150 units after relocations and closings. Walgreens also completed the rollout of its Customer Centric Retailing format in 400 stores in Texas during the quarter. “Customer response to the initiative, designed to improve the overall shopping experience and increase both the number of customer visits and basket size, has been positive,” Walgreens noted. The company also is adding its new beer and wine selection to most stores and now has nearly 1,600 stores with the products.