Walgreen September same-store sales jump, shares slip

CHICAGO (Reuters) - In-store flu vaccinations helped Walgreen Co , the largest U.S. drugstore chain, post a 5.3 percent jump in September sales at its stores open at least a year.

Same-store sales of general merchandise, which have suffered as consumers curb non-essential spending, also climbed for the first time since May.

Results topped analysts' expectations. Shares of Walgreen, which had already jumped 13.4 percent this week, hit their highest level since April 2008 before turning lower on the day.

Retailers kicked off their seasonal flu vaccinations earlier than usual this year amid raised awareness of the flu with the H1N1 pandemic. Walgreen is expected to see the biggest jump in revenue and profit from the strategy.

Pharmacy same-store sales rose 7 percent while same-store sales of general merchandise climbed 2 percent.

Analysts, on average, expected a 3 percent rise in overall same-store sales, with pharmacy same-store sales up 4 percent and general merchandise same-store sales up 0.4 percent, according to Thomson Reuters data.

Pali Capital analyst Robert Summers, who had forecast just a 1.8 percent same-store sales increase, said the results were "impressive" but "likely not sustainable."

The number of prescriptions filled at existing stores jumped 12 percent, including 5.2 percentage points due to pharmacists administering seasonal flu shots.

Such sales also got a 1.4 percentage point boost from more patients filling 90-day prescriptions, which count as three 30-day prescriptions in the month that they are filled.

FLU DRIVES GAINS

Walgreen, which administered 1.2 million seasonal flu vaccines in last year's flu season, has already given more than 2.4 million this season and aims to administer 5 million.

Analysts have said that giving more flu shots could help drive other sales, if people who come in for vaccinations decide to buy items such as cosmetics and candy.

The benefit of flu-related sales "should fade over the next 4-6 weeks or so based on current patterns," said Summers, who has a "neutral" rating on Walgreen shares.

"We have never been big believers in buying or selling stocks on flu. It happens every year. Sometimes it's good, other times not. This year however, appears to be well above average."

Walgreen's total September sales jumped 10.3 percent to $5.35 billion.

Walgreen's growth contrasted with a report from Rite Aid Corp , the No. 3 U.S. drugstore. On Thursday, Rite Aid said its same-store sales fell 0.3 percent in the four weeks ended September 26. Rite Aid's pharmacy same-store sales rose 0.7 percent, while general merchandise same-store sales fell 2.3 percent.

While Rite Aid's sales declined, they also topped expectations.

The introduction of generic drugs over the past year cut into pharmacy sales at both chains. Such drugs carry lower revenue, but are typically more profitable for drugstores.

CVS Caremark Corp , the second-largest U.S. drugstore chain, does not issue monthly sales reports.

Shares of Walgreen, which has 7,045 stores across the country, were down 0.1 percent at $38.15 after climbing to $38.75. The shares got a big boost on Tuesday, when Walgreen's quarterly profit topped expectations.

CVS shares were unchanged at $35.87 while Rite Aid shares fell 5 cents, or 3.3 percent, to $1.46.

(Reporting by Jessica Wohl, editing by Gerald E. McCormick, Dave Zimmerman)