DOW JONES NEWSWIRES
Walgreen Co.'s (WAG) same-store sales inched up 0.4% in December amid a milder flu season and the looming loss of major customer Express Scripts Inc. (ESRX), whose contract with the drugstore chain expired at the end of the year.
Analysts polled by Thomson Reuters expected same-store sales to decline 0.1% in December. The largest drugstore chain in the U.S. posted higher same-store sales in each month of 2011, though December's gain was the weakest.
Walgreen last month unveiled a plan to cut costs to help protect profits in anticipation of client losses from the failure to renew a contract with pharmacy-benefits manager Express Scripts. On Thursday, the company estimated the dispute negatively affected comparable prescriptions filled in Decemeber by roughly 1.5 percentage points.
For last month, same-store front-end sales increased 0.6%, well below analysts' projections of a 2.1% increase, while same-pharmacy sales were up 0.2%, beating expectations for a 0.4% decline. Pharmacy sales accounted for 58.4% of total sales for the month.
Flu shots administered at pharmacies and clinics season-to-date were 5.3 million versus 6 million last year.
Elsewhere in the drugstore universe, smaller rival Rite-Aid Corp. (RAD) on Thursday reported its same-store sales increased 3.6% in December, with a 0.7% increase in the front end of the store and a 5.2% jump in pharmacy same-store sales.
Analysts expect Rite Aid and CVS Caremark Corp. (CVS) each to gain market share as Express Scripts customers are forced to shift their prescriptions away from Walgreen. Roughly a third of Rite Aid stores are within a mile of a Walgreen location.
Shares of Walgreen were up 1.1% to $33.20 in trade before the market open. Shares of Rite-Aid were up a penny from its Wednesday close at $1.25.
-By Mia Lamar, Dow Jones Newswires; 212-416-3207; firstname.lastname@example.org