Walgreen Co.'s revenue from established stores fell 11.1 percent in September, more than analysts expected, as generic drugs and fewer weekdays hurt the drugstore chain's performance compared to last year.
The Deerfield, Ill., company said Wednesday the introduction of generic drugs over the past 12 months accounted for more than half of the 16.1 percent drop it saw last month in pharmacy revenue from stores open at least a year.
Revenue from the front end, or rest of the store, slipped a more modest 1.5 percent.
The introduction of generic equivalents to popular brand-name drugs like the cholesterol fighter Lipitor has hurt revenue for Walgreen and other drugstore chains because the generics cost less than their brand-name counterparts. At the same time, however, they boost profitability because they come with a wider margin between the cost for the pharmacy to purchase the drugs and the reimbursement it receives.
Walgreen also said September sales were hurt because the month had one additional Saturday and Sunday and one fewer Thursday and Friday compared to September 2011. Drugstores generally see more sales on work week days, when their customers are more likely to seek medical care and then fill a prescription.
The overall 11.1 percent drop in revenue from stores open at least a year was much larger than the 7.3 percent decline that analysts surveyed by Thomson Reuters expected, on average. That included an 11.4 percent drop in pharmacy revenue and a slight front-end decrease.
Revenue from stores open at least a year is considered a key indicator of retailer health because it leaves out results from locations that have opened or closed in the last year.
Walgreen runs 7,944 drugstores in all 50 states, the District of Columbia, Puerto Rico and Guam, or more than its main competitors CVS Caremark Corp. and Rite Aid Corp.