International News - Walgreens to spend $1bn on aggressive expansion

US health and beauty giant Walgreens is to invest US$1 billion (£600 million) next year in an aggressive store opening programme and a new distribution centre.

The spending is designed to enable the retailer to continue to hold its own against the might of Wal-Mart.

Walgreens, which has 4,200 outlets at present, plans to open approximately 450 more next year. The retailer has an ambitious medium-term growth programme and wants to have 7,000 stores by 2007.

Next year Walgreens is to concentrate on opening in California, Florida, Texas and Washington State. The retailer claims to be growing its store base faster than its health and beauty rivals, and to be gaining market share against all food, drug and mass-merchandise competitors in 55 of its top 60 product categories.

President Jeff Rein said: 'We've placed more emphasis on in-stock conditions and customer service, which we believe have fuelled our increases in non-pharmacy sales and market share.'

M+M Planet Retail analyst Bryan Roberts said: 'Walgreens is extending its lead in the drugstore sector. But Rite Aid, Eckerd and CVS all have expansion plans in place, so competition for sites is hotting up.

'Competition is increasing with the likes of Wal-Mart chucking pharmacies into stores, but Walgreens can cope. The population in the US is ageing dramatically and people are crying out for prescriptions.'

Last Monday, Walgreens announced record sales for the year to August 31 - up 13.3 per cent to $32.5 billion (£19.47 billion). Net earnings rose 15.4 per cent to US$1.18 billion (£706.9 million).