Key Walgreen July revenue metric tops expectations

DEERFIELD, Ill. (AP) — Walgreen Co.’s total July revenue from established stores climbed 6.3 percent compared to last year, when a business split hurt the nation’s largest drugstore chain. The increase was larger than Wall Street expected.

The Deerfield, Ill., company said Monday its performance last month included an 8.8 percent gain from the pharmacy and a 2.3 percent increase from the front-end or rest of the store.

The total figure beat average analyst expectations for 5.3 percent, according to Thomson Reuters. The pharmacy performance also topped the average forecast for 6.6 percent, but front-end revenue fell short of expectations for 2.7 percent.

Revenue from stores open at least a year is a key indicator of a retailer’s health, because it excludes the impact of recently opened or closed stores.

Walgreen operated 8,105 drugstores as of July 31, or 184 more than it did a year ago.

A split with the nation’s largest pharmacy benefits manager, Express Scripts Holding Co., hurt Walgreen’s July 2012 performance, which helped the comparison with last month.

Express Scripts runs prescription drug plans for employers, insurers and other customers, handling prescriptions for millions of people. Walgreen did not fill prescriptions for Express Scripts for most of 2012 after a contract between the two companies expired. That meant many Walgreen customers migrated to other drugstores.

The companies resumed doing business last September, but Walgreen saw slumping revenue for several months before then.

Walgreen said Monday the percentage of Express Scripts prescriptions returning to its stores continued to climb last month, but it didn’t offer specifics.

A calendar shift that gave Walgreen one more Wednesday and one fewer Sunday last month compared to July 2012 also helped results. Drugstores get more business on weekdays, when customers are more likely to see a doctor and fill a prescription, than they are during the weekend.

But generic drug introductions also continued last month to hurt the company’s top line.

Generic drugs hurt pharmacy revenue because they cost less than brand-name products. But they help profitability because they provide a wider margin between the cost for the pharmacy to purchase the drugs and the reimbursement received.

Total Walgreen revenue for July rose 8 percent to $6.03 billion. Pharmacy sales accounted for nearly 65 percent of that total.

Walgreen shares slipped 8 cents to $50.90 in morning trading Monday. The stock is still up almost 40 percent so far this year.

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