Slow holiday demand, mild flu season drain Walgreens’ year-end performance

DEERFIELD, Ill. Anemic holiday sales growth and a mile flu season drained much of the growth momentum out of Walgreen Co.’s year-end sales, the company reported today.

Total sales rose a modest 7.8 percent in December over the same month last year, to $5.51 billion. Same-store sales were up a paltry 2.6 percent—remarkably weak by Walgreens standards—with front-end comps rising just 1.7 percent for the month and comp-store pharmacy sales up 3.3 percent.

Behind the weaker pharmacy numbers: the ongoing surge in sales of lower-cost generic drugs—which despite relatively high gross margins can’t match branded drugs for top-line revenues—and little demand for flu medications. “Comparable pharmacy sales were negatively impacted by 4.4 percentage points due to generic drug introductions in the last 12 months,” the company reported. “Impacting pharmacy sales was a milder flu season, which hurt the number of prescriptions filled by 2.6 percentage points.”

Total prescriptions filled at comparable stores increased 1.4 percent in December, Walgreens stated today. Overall, pharmacy sales accounted for 57.3 percent of total sales for the month.

Front-store performance, meanwhile, suffered from “weakness in seasonal categories, the withdrawal from the market and cautions on the use of cough and cold products for children 6 and under, and aggressive pricing on digital photo prints,” Walgreens noted. Bright spots included gift cards, consumables and private-label brands, “as consumers looked for value.”