- The Washington Times - Wednesday, March 15, 2006

Walgreen Co. is making plans to move into the District with eight to 10 drugstores as part of a nationwide expansion.

The CVS rival is considering downtown sites including a West End location, said Keith Sellars, director of retail development at the Washington, DC Economic Partnership.

“We’re looking in the area but nothing is definite,” said Carol Hively, a Walgreen spokeswoman.

Walgreens, the nation’s largest drugstore chain by sales and second to CVS in number of stores, hasn’t signed any leases here yet.

“We’re extremely excited about Walgreens coming into this market,” Mr. Sellars said. “They’re in just about all the other markets except this one.”

The move to Washington is part of the Deerfield, Ill., company’s plan to add more than 1,800 stores by 2010.

“We’re looking to meet the demands of aging baby boomers,” Ms. Hively said. “We want to meet the demand now and we’re anticipating even more.”

The Washington area has the nation’s sixth-largest population of people 55 and older, according to research by Morgan Stanley, which has an investment banking relationship with Walgreens.

“You look down the list of top 20 elderly populations [by city] and Walgreens has a prominent position in almost all of them,” said Morgan Stanley food and drug retail analyst Mark Wiltamuth. Washington “is one of their holes.”

Since 2002, Walgreens has gained market share in New York, Chicago and Miami and opened stores for the first time in Philadelphia — accounting for four of the top five cities by elderly population. But its market share has fallen over the past four years in Los Angeles, the No. 2 city, since the Long’s drugstore chain moved into that market.

Walgreens has also opened stores for the first time in Baltimore, Detroit, Atlanta and Riverside, Calif., other cities in the top 20.

Nearby elderly populations are important because prescription drugs make up a large percentage of sales for drugstore chains. Prescriptions account for about 70 percent of sales at CVS and 60 percent at Walgreens, said Andrew Wolf, an analyst with BB&T; Capital Markets in Richmond.

“They look for large amounts of prescriptions being filled,” said Mr. Wolf, who said he does not own Walgreens stock. BB&T; does not have a business relationship with the company.

Urban drugstores tend to have a higher percentage of sales from convenience items instead of pharmaceuticals, Mr. Wolf said.

In the Washington area, Walgreens would compete against CVS’ 166 locations, Rite Aid’s 53 stores, Eckerd’s 18 shops and area grocery stores with pharmacies.

While Walgreens is expanding by building new stores or buying existing locations, CVS is growing by buying smaller chains. Federal antitrust regulators Tuesday approved CVS’ recent purchase of 700 Osco and Sav-On stores from Albertson’s.

Walgreens’ growth strategy has boosted sales from 12.5 percent to 16.7 percent each year for the past five years. Sales at the chain, which was founded by Chicago pharmacist Charles R. Walgreen Sr. in 1901, rose to $42.2 billion in fiscal 2005.

The company opened 435 stores last year and now has more than 5,122 stores in 45 states, with the largest concentrations in Florida, Texas and Illinois.

“We open a new store every 20 hours,” Ms. Hively said. “We’ve been on that growth rate for years and plan to continue growing that quickly.”

There are 56 Walgreens in Virginia and 20 in Maryland, including one on High Street in Waldorf and two in Glen Burnie.

Walgreens closed its last store in the Washington area in the 1980s. It was a not-for-profit shop that opened in the Pentagon’s concourse during World War II.

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