Walgreens trims expansion plans

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Sales in Walgreens stores were up 6.6% for the first quarter of fiscal year 2009, however the company announced it was further curbing its new store openings in light of the economy.

The Deerfield, IL-based retailer said sales rose to $14.9 billion, while sales in comparable stores rose 1.7%. Prescription sales, which accounted for 66% of sales, rose 6.2%. Net earnings, however, dropped 10.4% to $408 million or 41 cents per share, down from $456 million or 46 cents per share for the same quarter last year.

"We continue to post solid sales results and achieve strong cost control in this difficult retail environment,” said Walgreens president and COO Gregory Wasson in a statement. “Customer traffic strengthened through the quarter and we're making substantial progress on our growth strategies to get more from our core operations and enhance the customer experience.”

The company said it would further reduce store openings at a rate between 4% and 4.5% in 2010, and between 2.5% to 3% in 2011 - a move that would reduce capital expenditures by another $500 million. The reduction is on top of previous cuts announced in July, when the company said it would slow store openings to 5% by 2011, saving an initial $500 million in capital expenses.

“We believe that further slowing of organic store growth is a prudent step in the context of current economic conditions,” Wasson said. “Furthermore, by freeing up human and financial capital, substantial upside exists to drive greater value creation by enhancing the best community-based store network in America. This includes refreshing and remodeling existing stores, more efficient assortment within stores, prescription file buys and continued expansion of retail and worksite clinics.”

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