Walgreen's Sunny Sales

I must confess up front to an addiction. It doesn't involve drugs or alcohol, thankfully. It has to do with same-store sales. When it comes to this number, I am hopeless, always in need of a double-digit increase for a fix. Well, I found one in Walgreen (NYSE:WAG).

The retail pharmacy reported a 15.6% increase in overall sales when compared with June 2003, coming in at $3.126 billion versus $2.704 billion. That's a wonderful figure in and of itself, but the comp-sales component of that total represented a 10.6% increase, and we all know that comp sales are where it's at because these revenues, derived from stores that have been open for a year or longer, tend to more accurately reflect the underlying health of a retail chain. Stores that have just opened or haven't been around as long as a year tend to skew the interpretation of fundamental growth trends, on the theory that people might be transiently drawn to a new location; the best measure of loyalty and success comes from sales data at aging locations.

So I love this metric, and I love these results. Walgreen had a more mellow outing in May with same-store sales, which came in at 8.5%. But since the company's last quarterly checkup was quite copacetic, I can dismiss those results (besides, anything more than 8% is still dandy).

Walgreen will have to watch out going forward, since CVS (NYSE:CVS) will be closing soon on its deal to buy more than 1,200 Eckerd drugstore locations from J.C. Penney (NYSE:JCP), with the rest going to Canadian concern Jean Coutu, which operates the Brooks Pharmacy stores.

Rite Aid (NYSE:RAD) will also need to be wary of this event, as I mentioned in my recent piece on its latest earnings. I received an avalanche of correspondence -- well, maybe not an avalanche, but more than usual -- about that article; many readers took me to task for not recognizing the potential in Rite Aid stock. Let me say again that if one is a long-term investor, I see more safety in either CVS or Walgreen; I do, however, recognize the improving environment Rite Aid has engineered for itself. To me, CVS and Walgreen are like the Coca-Cola (NYSE:KO) and PepsiCo (NYSE:PEP) of this sector, and I just feel more comfortable with those two companies. I do, however, wish all Rite Aid stakeholders the best of luck, and I definitely see the possibility of positive catalysts on the horizon for the chain, which would lead to share appreciation. Nevertheless, I still feel it is a speculative bet at this juncture.

Well, the shakes have ceased since I got my fix for double-digit-comp-sales increases (I didn't think I was going to make it). In closing, why not check out this chart of all three drugstore companies mentioned and see how things have been faring. CVS is certainly looking like the healthy horse.

Fool contributor Steven Mallas owns shares of Coca-Cola, but none of the other companies mentioned.