Dismal economy stalks November sales as Walgreens closes out a bleak month
DEERFIELD, Ill. In a sure sign of the downward economic spiral plaguing the nation’s retailers, Walgreen Co. reported a nearly one-percent decline in same-store sales for the month of November.
Overall sales edged up 3.7 percent for the month over the same period last year, to $4.96 billion. But sales in stores open more than a year fell 0.9 percent. Comparable-store front-end and pharmacy sales also slid 0.9 percent, Walgreens announced today.
Black Friday and the following weekend saw stronger consumer traffic than a year ago, according to the company, but fewer items were purchased per transaction. Transactions in comparable stores rose 1.7 percent in November.
Pharmacy sales for the month were up an anemic 2.4 percent on a total-store basis, pulled down both by sagging consumer activity and by the increasing use of lower-priced generic drugs over their brand-name counterparts. Comp-store pharmacy sales, according to Walgreens, “were negatively impacted by 2.3 percentage points due to generic drug introductions in the last 12 months.”
The company also blamed a shift in the calendar for the comp-store decline in pharmacy business, “as pharmacy patients fill more prescriptions during the week than on weekends.
“This year, November had two fewer weekdays compared to November 2007,” Walgreens reported. “Calendar shifts, along with one less holiday shopping week in November this year, negatively impacted total comparable store sales by 2.5 percentage points, front-end sales by 0.8 percentage points, comparable pharmacy sales by 3.4 percentage points and prescriptions filled in comparable stores by 3.3 percentage points.”
The bad news extended to total prescriptions filled, which decreased 3.4 percent on a comp-store basis in November over the same period last year. The shift of Zyrtec from prescription to over-the-counter status was another factor in that decline.
Pharmacy sales accounted for 64.4 percent of total sales for the month, according to the chain.
Walgreens said strong sales of basic necessities, consumables and key beauty items gave some lift to front-end revenues, as did Zyrtec’s switch to OTC status.
“Consumers continued to shop our stores for the essentials throughout the holiday weekend,” explained Walgreens president and chief operating officer Greg Wasson. In a hopeful note, he added, “As we approach the last-minute Christmas rush, shoppers will take even greater advantage of our wide selection of products and convenient locations.”
Walgreens opened 94 stores in November, including 15 relocations, and acquired eight stores. As of Nov. 30, the chain operated 7,123 locations in 49 states, the District of Columbia, Puerto Rico and Guam. That includes 6,630 drug stores—an increase of 491 stores over a year ago—as well as worksite health centers, home care facilities and specialty, institutional and mail service pharmacies.
The company’s Take Care Health Systems subsidiary manages 293 walk-in clinics at Walgreens drug stores. That figure doesn’t include franchisees of Option Care, Inc., a wholly owned Walgreens subsidiary.
On Monday, Walgreens also announced it had completed its purchase of McKesson Corp.’s specialty pharmacy operations, adding to its fast-growing specialty division.
Take Care Health Systems opens new clinics
CONSHOHOCKEN, Pa. Take Care Health Systems, which is owned by Walgreens, has opened two new clinics.
A new clinic in the Rockford, Ill. area brings to four the number of total clinics in the market. A new clinic in the Kansas City area brings to 14 the total number of clinics in that market.
The company currently operates 298 clinics in 33 markets throughout 15 states.
Most consumers believe economy is in a downturn, survey says
PORT WASHINGTON, N.Y. Even as President-elect Barack Obama’s economy package begins to take form, consumers are still not ready to open their purse strings. Not yet. According to a NPD Group survey released Wednesday, 91 percent of consumers believe the economy is still in a downturn, up from 84 percent who felt that way in April.
“Off-hand, that 7 percent increase may not sound like a lot,” said Marshal Cohen, chief industry analyst for The NPD Group, “but when you turn the spending faucet of 14 million people off, that 7 percent from April to November represents trillions of dollars.”
And the number of consumers who say they will take advantage of sales or coupons has remained relatively steady since July. “So those huge sales that were designed to lure the customer in really don’t seem to have had much of an impact. They aren’t bringing the consumer’s back in to shop,” Cohen said.
Most consumers—57 percent—are cutting back on their spending by cutting down on their number of trips to restaurants, a factor that ought to bode well for grocery outlets. That is followed by cuts in spending on apparel. In the November Consumer Spending Indicator, 52 percent of respondents said they would cut back on apparel spending.
The same categories that were the least vulnerable in last month’s study remain so in the current month’s study with one slight change. Video games and toys remain steady while beauty is being edged out of the No. 3 spot.
Video games take the top spot as the least likely to see cut backs in consumer spending with 32 percent, followed by toys at 36 percent. This month, however, movies took the number three spot at 39 percent. Beauty slipped to forth this month at 41 percent. “But beauty is still showing that women remain loyal to their regimen even in tough times,” Cohen said.
As previously noted, an important measure of how consumers are fairing is how secure they feel about their jobs. In July, 25 percent of respondents said they were not concerned about their jobs, but in November only 19 percent reported they were not concerned.
“This is a number I watch very closely,” Cohen said. “I think it is the best indication of consumer behavior and now, what with the stock market, the political market, the media market and now, the job market, we are seeing an all time low here.”