UPDATE 2-Walgreen July same-store sales miss estimates

* Same-store sales up 0.4 pct vs Street view 1.6 pct

* Fewer physician visits hurt pharmacy sales - analyst

* Shares down 1.4 percent (Adds analyst comment, share fall, byline)

By Emily Stephenson

CHICAGO, Aug 4 (Reuters) - U.S. drugstore chain Walgreen Co (WAG.N) reported a weaker-than-expected rise in July same-store sales, hurt by sales of lower-priced generic drugs and decreased sales of flu remedies.

Sales at drugstores open at least a year rose 0.4 percent compared to July 2009, less than the 1.6 percent expected by analysts, according to Thomson Reuters data.

Pharmacy sales have been weak across the industry this year as fewer people visit physicians and fill prescriptions, said Matthew Coffina, an analyst with Morningstar who covers Walgreen and other drugstores.

Fewer pharmacy visits also lead to lower general merchandise, or front-end, sales, he said.

"(Walgreen has) been indicating that they've been gaining market share," Coffina said. "They're certainly not gaining it as quickly as CVS Caremark (CVS.N) but are gaining compared to Rite Aid (RAD.N)."

Walgreen, which operated 8,037 drugstores as of July 31, said same-store pharmacy sales were flat in July, while sales of general merchandise -- snacks, cosmetics and other items -- rose 1.1 percent.

Analysts expected same-store pharmacy sales to rise 1.2 percent and front-end sales to rise 2.5 percent.

While generic drugs provide better margins for retailers, they cost less than their name-brand equivalents, so selling more generics cuts into sales for a drug store.

Same-store sales numbers do not include Duane Reade stores, which Walgreen purchased earlier this year.

Walgreen reported total July sales of $5.58 billion, a 6.2 percent increase from July 2009.

Walgreen shares were down 1.4 percent at $28.42 in midday trade. (Reporting by Emily Stephenson; editing by John Wallace)