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Rite Aid Corporation, through its subsidiaries, operates retail drugstores in the United States. The company’s drugstores primarily offer pharmacy services. It provides prescription drugs and front end products, which include over-the-counter medications, health and beauty aids, personal care items, cosmetics, household items, beverages, convenience foods, greeting cards, seasonal merchandise, and various other everyday and convenience products, as well as photo processing products. The company sells its products under the Rite Aid brand. It offers its products to customers covered by third party payors, such as insurance companies, prescription benefit management companies, government agencies, private employers or other managed care providers. As of February 27, 2010, the company operated 4,780 retail drugstores in 31 states, as well as in the District of Columbia. It has a strategic alliance with GNC to operate GNC stores within Rite Aid stores. The company was founded in 1927 and is headquartered in Camp Hill, Pennsylvania

DETROIT (Reuters) - Drugstore chain Walgreen Co (NYSE:WAG - News) posted an unexpected increase in September same-store sales, helped by stability in its pharmacy business, sending shares up 3.1 percent.

Pharmacy same-store sales rose 0.3 percent, better than the 1.7 percent decline analysts expected. The pharmacy business accounted for about two-thirds of sales for the month.

Sales at Walgreen's drugstores open at least a year rose 0.4 percent compared with September 2009, the company said Tuesday -- better than the 1.1 percent decline analysts had expected, according to Thomson Reuters data.

The weak U.S. economy has led consumers to spend less on prescription drugs and general merchandise at drugstores, and customer traffic fell at Walgreen in September.

However, analysts have said Walgreen has benefited from stronger pricing and fewer markdowns for general merchandise. Lazard Capital Markets analyst Tom Gallucci said the company's results on Tuesday suggest things may not be as bad as feared.

"If you look at industry trends, some of the pressures that people were afraid of early and in the middle of this year, there's some anecdotal evidence that (prescription drug use) is stabilizing," said Gallucci, who has a "hold" rating on Walgreen shares.

Shares of Walgreen rivals CVS Caremark Corp (NYSE:CVS - News) and Rite Aid Corp (NYSE:RAD - News) were up about 2 percent.

Before Walgreen's Tuesday report, Jefferies & Co raised its rating on the company to "buy" from "hold" and boosted its price target to $45 from $29.

Total front-end sales at Walgreen rose 0.7 percent on a same-store basis, better than the 0.1 percent increase analysts had expected.

Pharmacy same-store results were still hurt by generic drug introductions and fewer people getting sick with coughs, colds and flu, resulting in fewer flu shots.

Prescriptions filled rose 0.8 percent on a same-store basis as more patients filled 90-day prescriptions.

Flu shots administered at pharmacies and clinics in September totaled about 2 million, with nearly 2.25 million flu shots having been administered so far this season.

Kermit Crawford, Walgreen's president of pharmacy services, said in a statement that the company faced difficult comparisons versus last year, when demand for flu vaccine was heavy because of the H1N1 outbreak. However, he said the company has administered nearly 40 percent of the about 5 million shots it provided in the first quarter of last fiscal year when it ran out of vaccine late in the quarter.

The company also said it opened 24 stores during September, including four relocations, three acquisitions and four closures. It had 8,065 locations at the end of the month.

September sales rose 5.3 percent to $5.64 billion. Duane Reade stores, bought in April, contributed 2.8 percentage points to the total increase, but were not included in any same-store results.

Walgreen shares rose 3.1 percent, or $1.03, to $34.14 in New York Stock Exchange trading.

(Reporting by Ben Klayman. Editing by Gerald E. McCormick, Maureen Bavdek and Robert MacMillan)