Walgreens' private label business kept the Deerfield, Ill.-based retailer's profit margins afloat during the second quarter of fiscal 2011.
Walgreens' private label business kept the Deerfield, Ill.-based retailer's profit margins afloat during the second quarter of fiscal 2011. Crediting hard economic times for high private label sales, the company plans to drive further growth in their private label.
“Persistent high unemployment, a weak housing market, high fuel prices and inflation all put pressure on consumers,” Greg Wasson, president and CEO of Walgreens, said in a prepared statement. “In response, we believe our customers are managing their overall spending by buying more ad and private brand items.”
Increased sales in multiple private label categories boosted the company's gross margin to 28.1 percent from 27.6 percent in the prior year, according to CFO and executive vice president Wade Miquelon. “Thus far inflation is coming some but it's been manageable,” adds Miquelon. “And for the most part we plan on offsetting it through pricing...but we'll also be smart how we play our whole portfolio and drive things like private label even harder.”
Net sales rose by 6.8 percent to $18.4 billion, up from $17.2 billion one year ago. The company alludes healthy sales in personal care, beauty, over-the-counter medications and retail pharmacy as contributors to their recent sales growth.
Net earnings for the quarter also rose, elevating to $603 million from $463 million last year. Strong sales in the company's category mix also contributed to the increase in net earnings.