In-store flu vaccinations helped Walgreen Co , the largest U.S. drugstore chain, post on Friday a better-than-expected 5.3 percent jump in September sales at its stores open at least a year.

Same-store sales of general merchandise, which have suffered as consumers curb nonessential spending, also rose for the first time since May. Shares of Walgreen, which had already jumped 13.4 percent this week, hit their highest level since April 2008 before paring those gains.

Retailers kicked off their seasonal flu vaccinations earlier than usual this year amid raised awareness of the flu with the H1N1 pandemic. Walgreen is expected to see the biggest jump in revenue and profit from the strategy.

Walgreen has gained 1 percentage point of market share since April, as has its next-largest rival, CVS Caremark Corp , according to IBISWorld. Walgreen currently controls 27 percent of the market, while CVS holds 26 percent, according to the firm. Rite Aid has had 12 percent share since December.

Also on Friday, CVS said it expects to have about one-third fewer low-income subsidy members enrolled in its two Medicare Part D plans next year, which will trim earnings.

FLU DRIVES GAINS

At Walgreen, pharmacy same-store sales rose 7 percent while same-store sales of general merchandise rose 2 percent.

Analysts, on average, expected a 3 percent rise in overall same-store sales, with pharmacy same-store sales up 4 percent and general merchandise same-store sales up 0.4 percent, according to Thomson Reuters data.

Pali Capital analyst Robert Summers, who had forecast just a 1.8 percent same-store sales increase, said the results were impressive but likely not sustainable.

The number of prescriptions filled at existing stores jumped 12 percent, including 5.2 percentage points due to pharmacists administering seasonal flu shots.

Such sales also got a 1.4 percentage point boost from more patients filling 90-day prescriptions, which count as three 30-day prescriptions in the month that they are filled.

Walgreen, which administered 1.2 million seasonal flu vaccines in last year's flu season, has already given more than 2.4 million this season and aims to administer 5 million.

Analysts have said that giving more flu shots could help drive other sales, if people who come in for vaccinations decide to buy items such as cosmetics and candy.

The benefit of flu-related sales should fade over the next 4-6 weeks or so based on current patterns, said Summers, who has a neutral rating on Walgreen shares.

We have never been big believers in buying or selling stocks on flu. It happens every year. Sometimes it's good, other times not. This year however, appears to be well above average.

Walgreen's total September sales jumped 10.3 percent to $5.35 billion.

RITE AID SALES DROP

Walgreen's growth contrasted with a report from Rite Aid Corp , the No. 3 U.S. drugstore. On Thursday, Rite Aid said its same-store sales fell 0.3 percent in the four weeks ended September 26. Rite Aid's pharmacy same-store sales rose 0.7 percent, while general merchandise same-store sales fell 2.3 percent.

While Rite Aid's sales declined, they also topped expectations.

The introduction of generic drugs over the past year cut into pharmacy sales at both chains. Such drugs carry lower revenue, but are typically more profitable for drugstores.

CVS does not issue monthly sales reports.

The shares of Walgreen, which has 7,045 stores across the country, closed down 14 cents at $38.05 after rising to $38.75. The shares got a big boost on Tuesday, when Walgreen's quarterly profit topped expectations.

CVS shares closed down 1.5 percent at $35.32, while Rite Aid shares fell 6.6 percent, to $1.41.

(Reporting by Jessica Wohl, editing by Gerald E. McCormick, Dave Zimmerman and Andre Grenon)

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