Walgreen to Slow New Store Activity

Walgreen Co. (Deerfield, Ill.) blamed a 10 percent drop in first quarter profits on the costs of opening more than 200 stores. The nation’s largest drugstore chain said it planned to slow store opening to save $500 million in response to the recession.

In its 2010 fiscal year, Walgreen said it would slow its organic store openings to a rate of 4.5 to 5 percent, with growth of 2.5 to 3 percent in fiscal 2011. The reductions are expected to save the company a $1 billion in annual spending.

President and chief operating officer Gregory Wasson said the cuts were a response to the recession. Walgreen operates 6630 drugstores in 49 states. It plans to increase its store count by 475 in fiscal 2009, which ends in August.
 

Walgreen said its selling and general expenses grew 9 percent in the quarter ended Nov. 30, 2008, as it opened 212 stores, and profit margins dipped because of greater expense provisions.

Same-store sales grew 1.7 percent during the three-month period, with prescription revenue growing 2.6 percent – but flat in stores open at least a year. Front-end revenue, or sales of nonprescription products, was also flat.