Contrary to reports, new stores are not lagging in sales due tohigh construction and labor costs, said William Rudolphsen, thecompany's chief financial officer, during Walgreen's Q1 conferencecall. The stores that opened last year had average sales of justunder $2.1 million, higher than any first-year totals since 2002."The productivity of new stores has not diminished over the lastfive years," Rudolphsen said.

Geographically, Walgreen is making a push in the Northeast andCalifornia. The company is also expanding its in-store Take Carehealth clinics. Those are currently in 119 units, and management isshooting for that to increase to 400 by the end of next year.

Total same-store sales during the quarter, which ended Nov. 30,rose 5.4% year over year. Front-end sales in units increased 4.6%,while pharmacies posted a 5.9% gain. The number ofcomparable-prescriptions filled in stores rose 3.7%.