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CHICAGO -- As previously reported, Walgreens confirmed this week that it will start selling beer and wine in most of its 7,000 drug stores.
The national rollout will occur over the next 12 to 18 months as the company seeks and obtains the proper liquor licenses, The Chicago Sun-Times reported this week.
The nation's largest drug store chain in store count also reported that its effort to cut costs and revamp stores over the past year appears to be paying off. Walgreens this week reported higher quarterly sales in its pharmacy and general-merchandise operations, and higher cash flow from operations, according to a Wall Street Journal report.
Cash flow from operations increased 55 percent for the quarter ended Aug. 31, mainly because of lower inventories. Prescription-drug sales, which account for two-thirds of its total revenue, increased 9 percent. The company said gross margin, a key measure of profitability, increased slightly because of rising generic-drug sales.
Rather than open many new stores, Walgreens last year disclosed it would slow the pace of expansion and instead devote more time and money to improving its stores, which executives said had become cluttered and outdated.
A remodeled Walgreens store in suburban Chicago illustrates the changes it made to ease shopping in its stores. In some departments, Walgreens slashed the number of items stocked. In paper goods, the variety of products declined 30 percent, but sales jumped because the department is less confusing for shoppers, executives told the Journal.
Newly remodeled stores carry about 18,000 different items, or 4,000 less than un-remodeled stores.
Walgreens is remodeling 400 stores this fall along the new format, at a cost of about $40,000 per store, the newspaper reported. By December 2010, the company expects to finish about 80 percent of its planned store remodels.
The company also sees new opportunities for sales growth in particular markets. In certain Chicago neighborhoods, for example, Walgreens is expanding its grocery selection in areas that have no supermarket within a 1.5 mile-radius.
To respond to new customer preferences during the recession, Walgreens is also emphasizing staples, such as food and paper products, and stocking fewer impulse buys. It is pushing its private-label goods as well, which are priced below brand-name merchandise, but carry higher profit margins.
Total sales for the quarter rose 7.6 percent, to $15.70 billion. Sales at stores open at least a year increased 2.4 percent. Those sales were much stronger in pharmacy, increasing 4.5 percent, compared with a 1.4 percent decline for other merchandise, according to The Journal.
Walgreens Making Convenience Push