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Mixed Bag at the Pharmacy Chains

Walgreen (WAG) said same-store sales for June rose 10.1%, but another drugstore chain, Duane Reade (DRD - Get Report) said comparable sales in the latest second quarter were hurt by dreary weather and weakness in the economy.

Last month, Walgreen's total sales reached $2.70 billion, an increase of 14.4% from $2.36 billion for June 2002. Overall pharmacy sales climbed 18.4%, while same-pharmacy sales rose 14.5%.

For the calendar year to date, sales are up 12.8% to $16.31 billion compared with last year. Sales for the first 10 months of the fiscal year were $26.96 billion, up 13.2%. Same-store sales so far in the fiscal year have increased 8.3%.

Walgreen, based in Deerfield, Ill., opened 36 stores in June, including nine relocations. As of June 30 the company operated 4,077 drugstores in 43 states and Puerto Rico.

Meanwhile, New York-based Duane Reade said total sales for the second quarter were $355.2 million. The company sales were below its expectations, which Duane Reade attributed to the poor weather in the spring and weakness in the economy.

Same-store sales for the quarter rose 3.1%, with pharmacy same-store sales increasing 8% and front-end same-store sales declining 0.4%.

Duane Reade now expects second-quarter earnings of 20 cents to 21 cents a share, excluding a tax provision of about 4 cents related to the recently passed New York State tax legislation.

In addition, recent state tax rulings may force the company to provide reserves for periods prior to 2003, but the amount probably won't exceed $5 million. The earnings guidance also includes litigation-related expenses of about 2 cents a share.

Analysts polled by Thomson First Call are looking for a profit of 24 cents in the quarter. The company is scheduled to report second-quarter results on July 24.

Shares of Walgreen were up 18 cents, to $30.41. Duane Reade was unchanged at $14.64.

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