Drugstore chain Walgreens is in the midst of applying for the local government licenses needed to reintroduce beer and wine to its national chain of more than 7,000 stores, company spokesperson [image-nocss] Tiffani Washington told the newspaper.
The retailer had been selling liquor since the end of Prohibition, but stopped at most of its stores more than a decade ago because of the cost of managing the business, she added. New computer systems will make it easier to manage now, Washington said.
Walgreen posted a steeper-than-expected drop in quarterly profit on Monday as it wrote down the value of items being taken off its shelves as part of store makeover aimed at winning over shoppers, added a Reuters report.
The drugstore chain's new look, which costs about $30,000 to $50,000 to implement in each store, has lower shelves and a smaller selection of items.
The push to ignite growth comes at a tough time, the report said. CEO Gregory Wasson said during the call that Walgreen continues to see consumers use credit cards less frequently and shop closer to paydays, when they have cash.
The chain that prided itself on its convenient locations is promoting "affordable essentials" such as toilet paper to attract shoppers who switched to value-oriented chains such as Wal-Mart.
Walgreen is also cutting jobs and opening fewer stores than originally planned as part of its effort to return to double-digit earnings growth.
Such strategy changes led to 6 cents per share in costs and 6 cents per share in savings in the latest quarter. Walgreen earned $522 million, or 53 cents per share, in the third quarter that ended May 31, down from $572 million, or 58 cents per share, a year earlier.
"In our view, the quarter indicates the continued challenges of fixing the model amid a difficult economy," said UBS analyst Neil Currie, who has a "neutral" rating on Walgreen shares.
Last month, rival CVS Caremark Corp. posted a better-than-expected quarterly profit and issued a slightly brighter profit forecast.
Walgreen is reducing the number of different items it sells. For example, it may keep a smaller variety of superglues in stock, which allows hurried customers to make quicker decisions and frees up space for other products.
Nearly two-thirds of the $99 million Walgreen spent on restructuring, or $65 million, came from writing down the assortment of items, or stock-keeping units, the company shed.
Sales rose 8% to $16.21 billion, while sales at stores open at least a year increased 2.8%. Same-store prescription sales rose 3.8%.
Walgreen said it had filled 8.3% more prescriptions in the latest quarter than it did a year earlier, aided by more patients filling 90-day prescriptions. Those prescriptions, which are popular under many insurance plans, are counted as three 30-day prescriptions when they are filled.
Same-store general merchandise sales rose 0.9%.
Sales of private-label goods rose 13% and account for about 20% of Walgreen's general merchandise sales, CFO Wade Miquelon told Reuters. He sees private-label goods continuing to grow, echoing what happened in recessionary markets such as Europe, where private-label goods can account for about 30% to 40% of a retailer's sales.
"That's probably a good archetype for us," Miquelon said. "Could it be in that range? Yeah, it could be."
Click herefor previous CSP Daily News coverage of Deerfield, Ill.-based Walgreens.
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