It�s difficult to determine the true effect of the $4 PR campaign, but the number thrown around by CVS and WAG execs is: �a minimal effect, less than 1 script per store per day.�
Using some known variables and making a few assumptions, we can get a rough calculation of the effect to Walgreens� sales.
Variables and Assumptions:
1. less than 1 Rx per day � lets say 0.8 (generous IMO). The $4 program has been in my state for over 1 month and I haven�t transferred a single script to the Sams Club 4 blocks down the road.
2. roughly 5500 stores
3. 365 days per year (included for the benefit of Kanuk)
4. roughly 580,000,000 scripts Walgreens will fill this year
5. pharmacy sales are about 70% of total sales
6. these $4 scripts are very cheap, I�d say each generate less than � the sales of an �average� script (extremely generous IMO).
Punch the numbers and you get at most, a loss of:
0.067% of pharmacy sales
0.048% total sales
This is a very rough calculation, I admit. (The true effect is likely much less, perhaps even an order of magnitude less). The actual dollar numbers may seem large, but the relative effect is miniscule compared to the SSS and total sales numbers WAG consistently puts out.
And this, I believe, is a worst case scenario. WMT has had massive free PR in print, tv, internet, radio over the last several months. Now it�s old news. As time passes, the effect should diminish to a negligible, not-even-worth-calculating number. And perhaps, as immerlogic suggests, WMT may decide to eventually rid itself of this horrible loss-leader.
Either way, Walgreens has not been affected in any meaningful way. When drugstore.com was the threat-of the day, I remember transferring quite a few scripts to them. The chicken littles were out in force back then too (THE END OF BRICK AND MORTAR PHARMACIES!). And now, they�re basically a joke in the drug retailing world. In the big picture of Walgreens growth and expansion, this $4 PR stunt will be but a small bump in the road.
SOoooo... then you've sold your position to minimize your losses?
No, Yank. You have no strategy. I DID Notice that you failed to answer the question banana posed, though.
Oh, and maybe it's Alzheimer's
Banana... that would only be FAIR... we're quickly finding out that Yank is anything but fair...
I've asked that same question about 25 different ways, and he has yet to answer it. Why? Because all he wants to do is try to provoke me into calling him names and then get my ID flushed...
But I'm to smart to play that game.. instead I just post my investment strategy on this investment board and try to debunk those that are playing games, for the amusement of all who care to read...
I love a giving a good smackdown, but this one is too easy....I kind of feel sorry for the guy.
If you are predicting a plummet of to <10 per share. Can you please indicate how many shares you are shorting or have short.
I have been sitting here reading the banter between irun and you and I was wondering if you are going to short WAG since you can make $20+ per share based on your analysis. irun has said this is heading to 36 and has shown that he is long.
This way we have a "scorecard" on both of you, and not just irun.
Remember Yank's hotdog stand? The names weren't changed to protect the ignorant! He thinks it's all about sales. His store would sell dollar bills for 75 cents and he would be thrilled with all of the dollar bills he is selling.
"Everyone can see that the stock has not changed much since then, but the fact of the matter is you made 78% in 7 years. Solid return."
� over 7 years that included a recession and a gut-wrenching bear market.
"Once again you make a solid argument for NOT selling. Hold this stock long term and you reap the benefits."
I couldn't agree more Bananarug (although I highly suspect all the numbers yank is throwing out). Yank has no idea what's in his own best interest.
"WAG was not extremely overvalued in 1999.
What hole did you pull that crap from?
In 1999 WAG�s PE reached a high of 62 and ended the year at 46 (Fidelity Research Tools). I would call that absurdly overvalued. Today its PE is 24 � still a premium to the market, but a bargain nonetheless.
Kind words indeed, thank you. In truth, I�ve tried to emulate your calm, reasonable and thoughtful approach to posting, and so I direct your generous compliment back to you.