Key May revenue figure climbs 2.8 pct for Walgreen

DEERFIELD, Ill. (AP) -- Walgreen's revenue from established stores topped analyst expectations for May, even though a rise in generic drugs continues to dent the top line of the nation's largest drugstore chain.

The Deerfield, Ill., company said Wednesday that revenue from stores open at least a year increased 2.8 percent last month compared with May 2012. That included a 3.8 percent gain from the pharmacy, which accounted for most of its sales, and a 1.2 percent increase from the front end, or rest of the store.

Revenue at 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.

Analysts expected, on average, that total revenue from Walgreen's established stores would grow 1.8 percent last month, according to Thomson Reuters. They also forecast growth of 2.6 percent from the pharmacy and less than 1 percent from the front end.

Walgreen said sales grew even though generic drug over the past year and a shifting calendar hurt its performance.

A wave of generic equivalents to brand-name medicines has hurt revenue for drugstores over the past several quarters because generics cost less than their brand-name counterparts. But they also help earnings for those companies, because they come with a wider margin between the price drugstores pay to buy them and the reimbursement they receive for doling them out.

Walgreen said last month had one additional Friday and one less Tuesday than May 2012, which had a smaller impact on revenue. Drugstores typically get more business on Tuesdays, when customers are more likely to see a doctor and fill a prescription, than they are on a Friday.

Walgreen's comparison with May 2012 also was helped by a business split last year with Express Scripts Holding Co., the nation's largest pharmacy benefits manager. The drugstore chain fills prescriptions for Express Scripts, but the companies went several months at the start of 2012 without a new contract to work together, and many Walgreen customers migrated to other stores.

The companies resumed doing business last fall, but Walgreen saw slumping revenue for several months as a result of that split. Analysts have said that will make it easier for the drugstore chain to show year-over-year revenue growth for the first several months of 2013.

Walgreen said Wednesday that it continued to see an increase last month in the percentage of former Express Scripts prescriptions returning to its pharmacies, but it did not offer details.

Overall, the drugstore chain's revenue climbed 4.3 percent last month to $6.22 billion.

Walgreen operated 8,096 drugstores at the end of the month, or more than competitors CVS Caremark Corp. and Rite Aid Corp.

The company's stock rose 74 cents to $48.77 in afternoon trading Wednesday, while the Standard & Poor's 500 index slipped more than 1 percent. Its shares are up about 30 percent so far this year.