CVS reports October sales, third quarter results

CVS announced on Thursday that total sales for the four-week period ended October 29, 2005 increased 7.8 percent to $2.8 billion, compared to $2.6 billion to the prior year period. Total pharmacy sales represented 70.9 percent of total company sales in October.

Same store sales (sales from stores open more than one year) for the four weeks ended October 29, 2005 increased 5.6 percent over the prior year period. Pharmacy same store sales increased 5.1 percent, despite being negatively impacted by approximately 190 basis points due to recent generic introductions, which are being substituted for higher priced brand named drugs. Front-end same store sales increased 6.9 percent.

Halloween sales were strong overall, however October monthly sales were negatively impacted by a one-day shift in Halloween. The shift resulted in more holiday sales being included in November this year versus October of last year. CVS estimates the Halloween shift had a negative impact of approximately 60 basis points on front-end same store sales for the four-week period.

Additionally, Hurricane Wilma hit Florida, causing the closure of over 200 stores and prolonged power outages in others. Same store sales exclude 18 stores closed seven or more consecutive days from the impact of Hurricanes Katrina, Rita and Wilma. Same store sales include stores operating without power as a result of the hurricanes. CVS estimated the severe weather negatively impacted both front-end and pharmacy same store sales by less than 50 basis points for the four-week period.

Year-to-date, total sales for the forty-three week period ended October 29, 2005, increased 23.9 percent to $30.1 billion, compared to $24.3 billion in 2004. Same store sales for the 43 week period increased 6.4 percent over the prior year period. Pharmacy same store sales increased 7.1 percent, while front-end same store sales increased 4.9 percent.

CVS also announced on Thursday that net earnings for the third quarter increased 36.9 percent to $252.7 million or $0.30 per diluted share, compared with net earnings of $184.6 million or $0.22 per diluted share in the third quarter of 2004.

“The third quarter was a very solid quarter in our core business as well as our acquired stores,” said Tom Ryan, chairman of the board, president, and CEO “We achieved strong sales growth and significant gross margin improvement, which led to operating margin expansion and a 37% increase in net earnings. These results put us well on our way to finishing up a terrific year,” said Ryan.

CVS previously reported that net sales for the third quarter increased 13.4% to $9.0 billion, up from $7.9 billion during the third quarter of 2004. Same store sales for the quarter rose 5.7 percent, which included a positive impact of approximately 80 basis points from the inclusion of the approximately 1,100 stores acquired on July 31, 2004. Pharmacy same store sales rose 5.8 percent, while front-end same store sales increased 5.4 percent. Same store sales excluded 31 stores closed for seven or more consecutive days as a result of hurricanes Katrina and Rita. Total pharmacy sales represented 70.6 percent of total company sales for the quarter. Third party prescription sales were 93.9 percent of pharmacy sales for the quarter.

For the third quarter, CVS opened 39 new stores, closed 17 stores and relocated 30 others.

An archived conference call conducted on Thursday will be available on the web site for a one-month period at visit http://investor.CVS.com.

CVS is America’s largest retail pharmacy, operating 5,469 retail and specialty pharmacy stores (including 7 stores which remain closed as a result of hurricanes Katrina and Rita) in 37 states and the District of Columbia.