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Walgreens Q3 Earnings Call Transcript
Author: 123jump.com Staff
123jump.com
Last Update: 9:55 AM ET June 25 2009


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Wade D. Miquelon

We haven’t given obviously that kind of out guidance but I would say that’s probably kind of a bottom threshold. If you consider three-ish percent store growth, the basic maintenance infrastructure that we need and then the basic distribution of systems, that’s kind of a rough floor, I would say.

Eric Bosshard - Cleveland Research

Okay, and then if I could sneak one last one in, in terms of the reset stores, the 35, you said that they are running ahead of plan. Can you just quantify what you are seeing out of those stores in regard to, I guess really how you are evaluating them, if it’s an expense, if it’s a gross margin, if it’s the sales, if it’s a mix, what you are seeing out of those stores?

Gregory D. Wasson

I think, Eric, you know, obviously it’s too early to extrapolate and give any numbers on that. I will say that the two areas that we’ve really been focused on in those 35 stores is the rollout period itself and what’s the disruption of sales look like. We feel good there that we are doing better than we expected, and as well as obviously the lift coming out of it. We feel good there, we are beating those metrics. But I do think the four wins that we talked about earlier, the improved sales, improved margin, the reduction in payroll and inventory is what we are absolutely focused on and we believe we are going to be able to achieve.

Wade D. Miquelon

In the shopper feedback right, the ultimately experience is coming back very positive as well.

Eric Bosshard - Cleveland Research

Great. Thank you.

Operator

And we’ll go next to Scott Mushkin of Jefferies.

Scott Mushkin – Jefferies & Co

Hey guys, thanks for taking my questions. First, the store you show us, the transformation, did that cost $50,000 or is that more?

Wade D. Miquelon

What you will see on YouTube, that’s kind of the general range.

Scott Mushkin – Jefferies & Co

Thirty to fifty-thousand, so you’re not, I mean, just to understand the process, because a lot of companies have done this and they have spent a lot more, it looks like a pretty radical change in the interior décor and what not. Is that not right?

Wade D. Miquelon

No, I think the best way to look at this Scott this really is what we would call a refresh of the store. It’s obviously the improved assortment, the optimization of SKUs, lowering the profile of the store and the Gondola height. So it’s not, there’s a lot that happens in that shot but it’s really refresh. Obviously the other thing we’re looking for is as we roll through this, our costs may be a little higher as we go into the first 35 stores but as we become more efficient with the process and the conversion, we expect to see even more efficiencies and therefore reduced cost.


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