Walgreen Nov. sales hurt by Express Scripts fight
DEERFIELD, Ill.—Walgreen Co. said Monday that sales at its drugstores improved in November, but its dispute with pharmacy benefits manager Express Scripts Inc. took a bigger chunk out of its revenue.
The largest drugstore operator in the U.S. said its total sales grew 4.2 percent to $6.09 billion in November. Revenue for the month at stores open at least a year grew 1.8 percent. That's considered a key comparison for retailers because it leaves out stores that recently opened or closed.
At stores open at least a year, Walgreen said its pharmacy revenue grew 1.2 percent and prescriptions increased 0.6 percent. The company said its impending split with Express Scripts reduced its revenue at stores open at least a year by 1.1 percent, a bigger decline than the 0.6 percent hit in October.
Sales of non-pharmacy items like household goods, food and cosmetics grew 2.7 percent. The company said fewer customers visited its stores open at least a year, but shoppers spent 3 percent more per trip.
Walgreen said the mildness of this year's flu season reduced its sales. It has sold fewer flu and cold treatments, and it's administered 5 million flu shots so far, down from 5.4 million by this time in 2010.
Express Scripts pays drugstores to fill prescriptions, but the companies have said they will stop doing business after this month, because they can't agree how much Walgreen should be paid.
Most people whose prescription drug benefits are handled by Express Scripts will not be able to fill their prescriptions at Walgreen stores after the companies' contract ends Dec. 31. Walgreen has said it expects to see prescription volume fall only slightly, but analysts expect a big drop in prescriptions, front-end sales and overall profit. The deal was bringing Walgreen billions of dollars a year in annual revenue.
Citi Investment Research Deborah Weinswig estimated that only 10 percent of Express Scripts clients are now filling their prescriptions elsewhere. She said the sales figures were weaker than she expected.
Walgreen said its total November prescriptions grew 1.5 percent and pharmacy revenue increased 3.4 percent. Front-end revenue rose 4 percent. At stores open at least a year, pharmacy revenue rose 1.2 percent, and front-end revenue grew 2.7 percent.
The company opened 31 stores in November and acquired one. That gave Walgreen 7,811 stores in all 50 states, Washington, D.C., and Puerto Rico. The company also runs more than 400 worksite health centers, home health care facilities and specialty and mail-order pharmacies.
Nov. 30 was the end of Walgreen's fiscal first quarter. The company said its total drugstore revenue rose 4.7 percent to $18.16 billion. Quarterly revenue at stores open at least a year grew 2.5 percent, as pharmacy revenue picked up 2.4 percent and front-end revenue rose 2.5 percent.
Analysts on average expect Walgreen to report $18.27 billion in revenue for the quarter, according to FactSet.
Walgreen shares gained $1.25, or 3.8 percent, to close at $34.37 as the markets moved higher.
