Walgreens Posts Sales Gain as it Adds Almost 2,000 Rite Aid Pharmacies
Walgreens said Wednesday that it had completed its takeover of 1,932 new stores that it agreed last year to buy from Rite Aid Corp. “Our growth strategy of increasing and consolidating volume, differentiating ourselves through value and quality of service, and controlling costs is bearing fruit across our businesses,” Walgreens Chief Executive Officer Stefano Pessina said in a statement announcing the results. Bloomberg reports that while same-store sales in the front of Walgreens’ U.S. drugstores, where customers buy items like shampoo and toothpaste, fell 2.7 percent in the fiscal second quarter, sales at the pharmacy counter in the back of the store grew 5.1 percent. This is a big win for the retailer, as 70 percent of Walgreens’ sales are generated from its pharmacy.
Total Retail's Take: While many retailers are trying to minimize their brick-and-mortar footprints, Walgreens is thriving by adding more store locations. In fact, Walgreens has raised its fiscal 2018 earnings forecast. The pharmacy chain's merger with Rite Aid is a big reason for that optimism, but Walgreens isn't without challenges. It will need to keep the momentum going in the upcoming months to combat CVS Health Corp, which recently announced the acquisition of Aetna Healthcare for $69 billion. CVS’ purchase of an insurance company could push it into new verticals, further adding pressure to Walgreens.