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Prescription Flap Hurts Walgreen in Q1

DEERFIELD, Ill. — Net earnings at Walgreen Co. fell by 25% to $413 million in the fiscal first quarter as a result of declines in prescription volume and front-end sales as well as shifts to generic drugs.

Walgreen said prescription sales decreased by 7.2% compared with the first quarter last year, but rebounded from an 8% drop in the fourth quarter, indicating some recovery as a result of a settlement reached over the summer with pharmacy benefits manager Express Scripts. Walgreens returned to the Express Scripts network on Sept. 15.

Overall sales in the quarter, which ended Nov. 30, decreased by 4.6% to $17.3 billion. Front-end comparable store sales decreased 2% percent, and store traffic declined by 4.2%. Basket size was up 2.2%, Walgreen said.

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Gregory Wasson

Gregory Wasson, chief executive officer, in a conference call Friday said the company was continuing to expand fresh food and private-brand offerings at stores.

“We've invested heavily in our own brands, including Walgreens Delish, Nice! and many more, and year-over-year private-brand penetration in our front-end sales improved 200 basis points to 22%,” he said. “In my 32 years I've never seen our store managers as excited as they are now about our private brand offering.”

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