UPDATE 2-Walgreen's retail pharmacy market share rises

Thu Nov 4, 2010 1:04pm EDT

* Retail pharmacy market share now 19.5 pct

* On track for savings of $1 bln in fiscal 2011

* Shares up 2 pct (Adds share rise, background, store openings pace)

NEW YORK, Nov 4 (Reuters) - Walgreen Co (WAG.N) is on track to meet its goal of $1 billion in savings this fiscal year as it converts thousands of drug stores to a new, streamlined format.

The drugstore chain is slowing its pace of store openings as it converts existing stores to a new format that reduces some of its pharmacists' administrative workload so they can spend more time interacting with customers.

It sees store growth of between 2.5 and 3 percent in 2011, down from 4.2 percent in 2010 from 9 percent in 2008. It currently has more than 7,600 stores.

By the end of 2011 it will have converted 5,500 of its stores to the new format.

Walgreen made the comments at an investor meeting on Thursday that was simultaneously broadcast over the Internet.

Walgreen also said its share of the U.S. retail pharmacy market has increased to 19.5 percent from 18.2 percent in 2008.

While the weak U.S. economy has led consumers to spend less, even on nondiscretionary items like prescription drugs, Walgreen's unexpectedly strong September sales results indicated that it has benefited from stronger pricing.

September sales at pharmacies open at least a year rose 0.3 percent, better than the 1.7 percent decline analysts anticipated.

Walgreen's shares were up 2 percent in early afternoon trading Thursday on the New York Stock Exchange, outperforming the broad S&P 500 .SPX index and stock of rival CVS Caremark Corp (CVS.N), up 1.4 percent. (Reporting by Helen Chernikoff; Editing by Derek Caney and Tim Dobbyn)

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