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Safeway president of perishables exits company

BY Doug Desjardins

PLEASANTON, Calif. Safeway’s president of perishables, Des Hague, has left the company and will be replaced by executive Kelly Griffith. A statement from Safeway stated Hague left the company “to pursue other business opportunities.”

“We are grateful for the contributions and wish him well in his future endeavors,” said Safeway president and chief executive officer Steve Burd in a statement.

Griffith has been with Safeway for 28 years and was most recently president of the chain’s Portland Division, a position he’s held since 2005. His position is going to be filled by Steve Frisby, who is currently president of Safeway’s Texas Division. Frisby has been with Safeway since 1972.

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Rite Aid purchases 12 Pharm drug stores from Spartan

BY Michael Johnsen

GRAND RAPIDS, Mich. Almost one year following its acquisition of Brooks/Eckerd, Rite Aid is making another acquisition, albeit on a much smaller scale, with the purchase of 12 Pharm drug stores from Spartan Stores, Spartan announced Thursday morning.

“The Pharm stores have been a good business for Spartan Stores and it is staffed with hard working and dedicated associates, making this divestiture transaction a more difficult decision,” stated Craig Sturken, Spartan chairman and chief executive officer. “Divesting these stores, however, will allow us to concentrate efforts and resources on business opportunities with the best long-term growth potential and focus more on our core distribution and conventional supermarket operations. The transaction also provides the Pharm associates with good employment opportunities within Rite Aid.”

Completion of the sale is subject to customary due diligence by Rite Aid.

Spartan Stores is in negotiations to sell certain assets of its remaining two Pharm stores in independent transactions, the company stated.

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Walgreens sales gain in March, but Easter, not Rx, gets the credit

BY Jim Frederick

DEERFIELD, Ill. Walgreens saw a healthy but qualified rise in sales for the month of March, as an early Easter season pumped up front-end revenues but the pharmacy side of the business lost steam.

Sales for the month rose 10.6 percent over the same period a year ago, Walgreens reported today. Same-store sales were up a more modest 4.4 percent, despite an 11.3 percent increase in same-store front-end sales.

“The company recorded strong Easter seasonal sales, and front-end sales exceeded expectations for the month despite the slowing economy,” Walgreens noted in a statement.

Despite the gains, Goldman Sachs retail analyst John Heinbockel termed the March results less than stellar, noting that the overall comp-store gains of 4.4 percent were below his prediction of a 6 percent rise. “Walgreens’ March sales were a mixed bag, with the front end exceeding expectations and the pharmacy trailing our estimate,” he noted in a report today.

“Interestingly, seasonal business was stronger than at Christmas, although we attribute this more to the lower-ticket nature of Easter than to any fundamental strengthening in the consumer,” Heinbockel added.

Results at the pharmacy counter reflected an industry-wide slowdown in demand and the ongoing effect of generic drug introductions, which have drained sales of some major, higher-priced brand-name drugs over the past year. Result: March pharmacy sales at Walgreens were up just 6.9 percent, modest by Walgreens standards.

Comp-store pharmacy sales were even worse, edging up a meager 0.8 percent, and total prescriptions filled at stores open more than a year actually decreased 0.1 percent.

“Comparable pharmacy sales were negatively impacted by 4.4 percentage points due to generic drug introductions in the last 12 months,” the company reported. “Prescriptions filled, which have slowed industry-wide since December, continued that trend in March, especially the last two weeks surrounding Easter.”

Walgreens also blamed calendar day shifts for the difficult comparison with last year, saying the change accounted for a negative impact of 1.3 percentage points on both comparable pharmacy sales and numbers.

Growth in prescriptions dispensed at Walgreens counters—as was surely the case for its competitors, as well—was also hampered by the shift in the big-selling allergy medication Zyrtec from prescription to lower-priced OTC status. Walgreens said that change, combined with a slowdown in flu season demand, pared the rate of prescriptions dispensed in March by 1.6 percent.

Walgreens opened 39 stores during the month, including five relocations. It also acquired one store and closed one, ending the month with 6,271 drug stores (including 89 home care division locations, 12 specialty pharmacies and two mail service facilities) in 49 states and Puerto Rico, versus 5,675 a year ago. The company also operates 154 Take Care Health Clinics. Franchisees of Option Care, Inc., a wholly owned subsidiary of Walgreens, are not included in Walgreens store count.

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