Walgreens January Sales Decrease 2.3 Percent

DEERFIELD, Ill., February 03, 2012 - Walgreens (NYSE: WAG) (NASDAQ: WAG) had January sales of $5.80 billion, a decrease of 2.3 percent from $5.93 billion for the same month in fiscal 2011.

Total front-end sales increased 2.7 percent in January 2012 compared with the same month in 2011, while comparable store front-end sales increased 1.6 percent, following a 0.6 percent increase in December. Customer traffic in comparable stores decreased 0.6 percent while basket size increased 2.2 percent.

“We are pleased with our front-end performance in January and that front-end comparable sales increased year-over-year, demonstrating the value of Walgreens to our customers as we continue to move forward with our strategy to become America's first choice for health and daily living,” said Walgreens President and CEO Greg Wasson.

Prescriptions filled at comparable stores decreased 8.6 percent in January. Calendar day shifts in January, which had one additional Tuesday and one fewer Saturday compared with January 2011, positively impacted prescriptions filled in comparable stores by 1.3 percentage points. Lower incidence of flu negatively impacted comparable prescriptions filled by 1.5 percentage points. The negative impact on comparable prescriptions filled due to no longer being part of the Express Scripts, Inc. pharmacy network on Jan. 1, 2012 was 10.6 percentage points. Prescriptions processed by Express Scripts comprised 12.4 percent of Walgreens prescriptions in January 2011.

“We expected that January would be a very challenging month on a comparable prescription basis because of the impacts from not being part of the Express Scripts network as of Jan. 1 and the much milder cough, cold and flu season we have been experiencing,” said Kermit Crawford, president of pharmacy, health and wellness services and solutions. “With January now behind us, we are moving forward with relationships with large and small employers, health systems, physician groups and other PBMs who value Walgreens ability to help lower overall health care costs. As we expect these relationships to grow, and as we move past the impact from this year’s weak flu season, we anticipate an improvement in the coming months in the number of comparable prescriptions filled relative to January’s result.”

The company said it now expects prescriptions filled in fiscal year 2012 to be around the low end of its previously announced range of 97 to 99 percent of prescriptions filled in fiscal year 2011. This estimate is based on various factors that are subject to change including:

• the company’s current estimate of the impact of no longer being part of the Express Scripts network (including for clients such as Tricare and WellPoint);
• a much weaker than expected flu season to date and expectations for that to continue; and
• general weakness in current industry prescription trends.

Commenting on the Centers for Medicare and Medicaid Services (CMS) data released Feb. 1, Crawford said, “Based on our preliminary analysis, Medicare Part D plans with Walgreens in their network gained market share on average, while those without Walgreens lost market share. Importantly, we were very pleased to see that those plans that included Walgreens grew nearly twice as fast on average as those Medicare Part D plans without Walgreens.”

Also today, Walgreens reported the results of its January promotion of one-year memberships in its Prescription Savings Club. The promotion resulted in a record signup of more than 700,000 new memberships. The program offers savings on more than 8,000 brand name and all generic medications. For more than 400 generic medications, Walgreens offers a three-month supply for less than $1 a week.

As for January sales results, pharmacy sales decreased 6.0 percent, while comparable pharmacy sales decreased 7.9 percent. Calendar day shifts positively impacted pharmacy sales in comparable stores by 1.3 percentage points. Comparable pharmacy sales were negatively impacted by 2.1 percentage points due to generic drug introductions in the last 12 months, by 2.4 percentage points due to lower incidence of cough, cold and flu and by 10.6 percentage points due to no longer being part of the Express Scripts network as of Jan. 1. Pharmacy sales accounted for 63.6 percent of total sales for the month.

Flu shots administered at pharmacies and clinics season-to-date were 5.5 million versus 6.3 million last year.

Sales in comparable stores (those open at least a year) decreased 4.6 percent. The effect of calendar day shifts positively impacted total comparable sales by 0.8 percentage point.

Fiscal 2011 year-to-date sales for the first five months were $30.94 billion, up 2.9 percent from $30.08 billion in the comparable period in fiscal 2011.

Walgreens opened 14 stores during January, including two relocations.

At Jan. 31, Walgreens operated 8,270 locations in all 50 states, the District of Columbia, Puerto Rico and Guam. That includes 7,830 drugstores, 161 more than a year ago, including 21 stores acquired over the last 12 months. The company also operates home care facilities and specialty and mail service pharmacies. Its Take Care Health Systems subsidiary manages more than 700 in-store convenient care clinics and worksite health and wellness centers.

Please note: Sales numbers and the adjustments shown in the table are preliminary, unaudited and subject to revision. Comparable stores are defined as those drugstore locations open for at least 12 consecutive months without closure for seven or more consecutive days and without a major remodel or a natural disaster in the past 12 months. Acquired operating locations and relocations are not included as comparable stores for the first 12 months after the acquisition or relocation.

Cautionary Note Regarding Forward-Looking Statements: Statements in this release that are not historical, including, without limitation, statements regarding future prescription growth and business retention, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "expect," “likely,” "outlook," “forecast, "would," "could," "should," “can,” “will,” "project," "intend," "plan," "continue," "sustain," "on track," "believe," "seek," "estimate," "anticipate," "may," “possible,” "assume," and variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and involve risks, assumptions and uncertainties, including, but not limited to, the changes in vendor, payer and customer relationships and terms, competition, industry consolidation and the effects thereof, changes in economic and business conditions, risks associated with new business and business retention initiatives and activities, failure to obtain new contracts or extensions of existing contracts, risks associated with acquisitions and divestitures, the ability to realize anticipated results from capital expenditures and cost reduction initiatives, and outcomes of legal and regulatory matters. These and other risks, assumptions and uncertainties are described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K, which is incorporated herein by reference, and in other documents that we file or furnish with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, Walgreens does not undertake, and expressly disclaims, any duty or obligation to update publicly any forward-looking statement after the date of this report, whether as a result of new information, future events, changes in assumptions or otherwise.

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