Key revenue measure falls 4.6 pct at Walgreen

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Updated: February 3, 2012 1:31PM

Walgreen Co. said Friday that January revenue from stores open at least a year fell 4.6 percent, as a split with Express Scripts Inc. and a weak flu season hurt business for the largest U.S. drugstore chain.

Walgreen, based in Deerfield, said pharmacy revenue at stores open at least a year tumbled nearly 8 percent largely due to the Express Scripts dispute. That was balanced partially by a 1.6 percent increase in revenue from the front-end, or the rest of the store.

The performance mostly fell below Wall Street expectations. Analysts surveyed by Thomson Reuters expected, on average, same-store revenue to fall 2.7 percent, with a 4.6 percent drop in pharmacy sales and a slight gain for the front-end.

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.

Walgreen and Express Scripts, a pharmacy benefits manager, let a contract between them expire in December. Express Scripts paid Walgreen to fill prescriptions, but the companies had said for months before the end of last year that they were preparing to stop doing business.

Walgreen has said it would rather give up the revenue it gets from Express Scripts, which is based in St. Louis, than continue filling unprofitable prescriptions.

Walgreen has said the break would hurt its sales and earnings during fiscal 2012, but it also expected to keep 97 to 99 percent of its fiscal 2011 prescription volume in the new fiscal year. It said Friday it now expects the volume to be at the low end of that range.

Pharmacy sales also were affected by generic drug introductions and lower cough, cold and flu business, and the drugstore operator said Friday that it expects the number of prescriptions it fills to improve in the coming months.

Total revenue for the month fell 2.3 percent to $5.8 billion from $5.93 billion.

Walgreen opened 14 stores in the month and had 7,830 drugstores at the end of January.