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Calendar day shifts aid May sales for Walgreens

BY CSA STAFF

DEERFIELD, Ill. — May proved to be a good month for Walgreens, as the drug store chain posted a total sales jump of 7% to nearly $6.1 billion.

Walgreens reported that its total front-end sales experienced a 5.5% increase, while comparable front-end sales realized a 3.6% increase.

For its pharmacy business, Walgreens said sales rose 7.8%, while comparable pharmacy sales increased 6.7%, accounting for 64.4% of total sales for the month. Prescriptions filled at comparable stores increased 7.1%, which included patients that filled 90-day prescriptions in May. Calendar day shifts positively impacted prescriptions filled in comparable stores by 1.7 percentage points, as May 2011 had one additional Tuesday and one fewer Saturday, compared with May 2010.

Customer traffic in comparable stores for May increased 1.6%, while basket size increased 2%, Walgreens said.

Walgreens also reported May sales in overall comparable stores increased 5.6% for the chain, which were positively impacted by 1.1 percentage points due to the calendar day shifts.

Duane Reade stores are not included in any comparable-store results.

In related news, Walgreens said it has completed its acquisition of Drugstore.com, a deal that is valued at approximately $409 million.

The deal, which was announced in late March, better positions Walgreens to offer customers a broad range of services by extending its multichannel initiatives.

“We welcome Drugstore.com’s leaders and employees to the Walgreens family,” Walgreens president and CEO Greg Wasson said. "Drugstore.com complements Walgreens center of gravity — our 7,700 drug stores — by extending many of our own multichannel initiatives that have been driving our growth. This acquisition also provides us a unique opportunity to access more than 3 million savvy, online loyal customers, and move even closer to our existing customers through relationships with new vendors and partners, adding approximately 60,000 products to our already strong online offering."

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REAL ESTATE

New York City’s Fifth Avenue has world’s highest retail rent rates

BY CSA STAFF

New York City — New York City remains the world’s most expensive retail destination as retailers focus on the major fashion capitals pushing global rents in prime locations even higher, according to the latest CB Richard Ellis (CBRE) Global Retail MarketView.

The average rent for space along Fifth Avenue from 49th Street up to 59th Street hit $1,900 per square foot in the first quarter. Hong Kong and Sydney came in second and third place in the rankings, with average per-square-foot rents of $1,697 and $1,301, respectively.

Nationwide the survey found that the price of retail space increased on the strength of increased consumer confidence and spending. The second-ranked U.S. retail market was Los Angeles, which placed twelfth worldwide with rents of $520 per square foot. Chicago slipped to fifteenth worldwide, with rents of $480 per square foot.

The fastest growing U.S. market was Dallas/Fort Worth. There, rents jumped by more than 30% in the last year to $150 per square foot — less than one-tenth New York’s level.

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FINANCE

Report: Wal-Mart executives discuss South Africa acquisition

BY CSA STAFF

Bentonville, Ark. — A report Thursday by the Associated Press said that Wal-Mart Stores executives met Thursday to discuss the proposed Massmart acquisition, which is expected to close in June.

According to the report, as Wal-Mart expands its international business, the company wants to bring ideas it gains from the South African chain to other markets.

The $2.4 billion purchase of a majority interest in Massmart, which operates 263 stores in South Africa, will put Wal-Mart in the building supply business, one of a variety of Massmart store formats.

J.P. Suarez, senior VP of international business development, told AP that Wal-Mart intends to expand Massmart’s footprint in southern Africa, and that a priority will be to offer more refrigerated food, a category lacking among Massmart and its competitors, Suarez said.

Massmart’s home building supply stores will be a new venture for Wal-Mart, which Suarez said may have potential for further development.

"We do want to take that capability and learn and apply it to any other market it might be relevant to," Suarez said.

Wal-Mart had to make concessions for the Massmart deal to go through, including promising to honor existing labor agreements for three years and not lay off any workers for two years.

Suarez noted South Africa’s Competition Commission’s approval of the deal could be appealed, but he expects it to close as scheduled.

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