* Walgreen same-store sales up 3.4 pct
* Rite Aid same-store sales down 0.6 pct
* Rite Aid shares fall 9.7 pct; Walgreen down 0.4 pct
(Adds analyst's comments, byline; updates stock activity)
By Jessica Wohl
CHICAGO, July 2 Customers filled more
prescriptions last month at Walgreen Co WAG.N and Rite Aid
Corp (RAD.N), but were not enticed to buy summer goods such as
sunglasses and lawn furniture.
Thursday's June sales reports show that consumers continue
to be cautious, with both retailers posting lower sales of
general merchandise at stores opening at least a year.
Aside from the sluggish economy, sales of seasonal items
were also hurt by the wet weather and cool temperatures that
blanketed much of the country.
U.S. drugstores get about two-thirds of their revenue from
prescription sales, but sales of items such as candy and
cosmetics can signal whether customers are willing to make more
Walgreen, the largest U.S. drugstore chain by revenue, said
sales at stores open at least a year rose 3.4 percent in June.
Same-store sales were driven by a 5.8 percent increase in
same-store sales at its pharmacy counters, while same-store
sales in the front end of Walgreen stores dipped 0.9 percent.
The front-end same-store sales decline was "pretty
disappointing" especially since sales have gotten a boost from
higher tobacco taxes in recent months, said Pali Capital
analyst Robert Summers.
Walgreen is working on an overhaul that includes slowing
its store opening plans and weeding out extraneous merchandise.
Its shares fell last month after it reported a
steeper-than-expected drop in quarterly profit [ID:nN22495005]
and slipped less than 1 percent on Thursday.
"For a while they have been getting the benefit of the
doubt and I think that numbers like this will make it more
challenging for people to approach it that way," said Summers,
who rates the shares "neutral."
Walgreen said its same-store sales benefited by having one
more weekday in June 2009 than a year earlier. Customers tend
to fill more prescriptions on weekdays than on weekends. Also,
more patients filled 90-day prescriptions, which count as three
30-day prescriptions in the month in which they are filed,
which aided pharmacy sales.
SALES FALL AT RITE AID
Rite Aid, the third-largest U.S. drugstore chain, has been
working on its own changes such as store remodeling and
improving liquidity. On Wednesday, Moody's changed its outlook
on Rite Aid to "stable" from "negative" after the company
obtained a new $1 billion senior secured revolving credit
Rite Aid's sales tend to lag those of Walgreen and did so
again in June. Rite Aid's same-store sales slid 0.6 percent in
the four weeks that ended June 27. They rose 1.4 percent in its
pharmacy sections and fell 4.5 percent at the front end.
The company said sales continued to be more sluggish at the
Brooks and Eckerd stores it acquired from Canada's Jean Coutu
(PJCa.TO) in 2007 than at its other stores.
Total June sales rose 9 percent to $5.24 billion at
Walgreen and declined 2.5 percent to $1.97 billion at Rite Aid.
Pharmacy sales accounted for 66.7 percent of total sales for
the month at Walgreen and 67.9 percent at Rite Aid.
As of late June, Walgreen had 6,902 drugstores, 605 more
than a year earlier, while the number of Rite Aid stores had
fallen by 166, to 4,822.
Walgreen's shares slipped 0.4 percent to $29.21 while Rite
Aid fell 9 percent to $1.40.
(Reporting by Jessica Wohl; editing by Lisa Von Ahn and