Walgreens total sales, comps dip in May
DEERFIELD, Ill. — Walgreens on Tuesday posted May sales of nearly $6 billion, a decrease of 1.6% as compared with the same month in fiscal year 2011.
The negative impact on comparable-store prescriptions filled due to no longer being part of the Express Scripts pharmacy network was 10.8 percentage points. Prescriptions processed by Express Scripts comprised 12.7% of Walgreens prescriptions in May 2011. May pharmacy sales decreased 3.9%, while comparable-store pharmacy sales decreased 8.5%. Comparable-store pharmacy sales were negatively impacted by 3.9 percentage points due to generic drug introductions in the last 12 months and by 0.3 percentage points due to the product mix of cough, cold and flu drugs.
Pharmacy sales accounted for 63.1% of total sales for the month.
Prescriptions filled at comparable stores decreased 7.6% in May. Calendar day shifts in May, which had one additional Wednesday and Thursday, and one fewer Sunday and Monday, compared with May 2011, positively impacted prescriptions filled in comparable stores by 1.3 percentage points.
Walgreens' May sales announcement follows a statement from the drug store chain that its dispute with pharmacy benefit manager Express Scripts had been mutually dropped, and that Walgreens would be extending its partnership with OptumRx, one of the largest pharmacy benefit managers in the United States.
"Since Jan. 1, our underlying trend for number of prescriptions filled has improved," Walgreens EVP and CFO Wade Miquelon said. "Looking forward, we expect our number of prescriptions filled to be helped as employers and health plans take a variety of steps ranging from changing prescription benefit managers to changing language in new RFPs to provide continued access to Walgreens and our services. In what is the busiest selling season in recent memory, we are pleased that we have continued to receive notification of pharmacy plans regaining access to Walgreens pharmacies with new contracts that become effective throughout the remainder of the year. In addition, we extended our multi-year agreement to build on our strategic partnership with OptumRx, one of the largest pharmacy benefit managers in the United States."
Walgreens did see a small positive gain in total front-end sales, which increased 0.3%, compared with the same month in 2011; however, comparable-store front-end sales decreased 1%. Customer traffic in comparable stores decreased 2.3% while basket size increased 1.3%.
Sales in comparable stores decreased by 5.8%. The effect of calendar day shifts positively impacted total comparable sales by 0.8 percentage points. Last week, Credit Suisse analyst Ed Kelly projected that Walgreens would experience a 5% to 6% drop in comps, saying "the weak May results close out what should be a disappointing top-line quarter for the company," adding that "the loss of [Express Scripts] traffic and recent adjustments to the circular are impacting front-end sales."
Calendar year-to-date sales were $29.4 billion, a decrease of 2.2% from nearly $30.1 billion in 2011.