Walgreen says key sales measure fell as it offered fewer seasonal items and shoppers cut back

Walgreen says key sales reading fell in December

DEERFIELD, Ill. — Walgreen Co. says shoppers bought fewer holiday items in December compared with a year earlier, and it carried fewer seasonal products, both of which weakened a key sales measure for the drugstore chain.

Walgreen said sales at its stores that have been open at least a year fell 0.3 percent for the month, including a 3.1 percent drop in sales of non-pharmacy items like food and beauty products.

The company said it stocked fewer seasonal items so it would not have to discount as many after the holidays. Its spending on them fell 28 percent at stores that have been open at least a year.

Walgreen runs 7,149 stores, more than 500 health clinics, home care facilities and specialty, institutional and mail service pharmacies. In afternoon trading, its shares fell 24 cents to $36.76.

The company said its sales of flu remedies fell from a year earlier, and fewer shoppers came to its stores and they spent less money each time they did. At stores open at least a year, customer visits fell 0.8 percent and sales per transaction shrank 2.3 percent, while pharmacy revenue rose 1.8 percent.

Pali Capital analyst Robert Summers said stores running out of stock didn’t contribute significantly to the sales decline. But he said sales of most non-pharmacy items fell more than the 3.1 percent average, noting that the figure includes revenue from sales of wine and beer, now available at about 1,600 Walgreen stores, and from new cigarette taxes.

Walgreen, based in Deerfield, Ill., had 7,149 retail stores at the end of the month, compared with 6,636 at the end of 2008. The figure for sales at stores open longer than a year are considered an important reading of retailer health because it excludes sales at stores that open or close during the year.

Total December sales at Walgreen rose 3.6 percent, to $6.3 billion, from $6.1 billion. Pharmacy sales increased 4.8 percent and front-end sales rose 1.5 percent. For all of 2009, they rose 7.3 percent, to $65 billion, from $60.6 billion.

Walgreen said a calendar shift hurt its sales for December 2009, which had one more Thursday and one less Monday than December 2008.