Walgreen Co posted weaker-than-expected August sales at stores open more than a year, hurt by generic drug introductions and a decrease in customer traffic.

The results were reported a day after most retailers beat analysts' sales expectations for August.

Sales at stores open at least a year, a closely watched measure of retail performance, increased 2.1 percent from the same month in 2009, the drug store chain said Friday. Analysts were expecting same-store sales to increase 2.4 percent, according to Thomson Reuters data.

Comparable pharmacy sales increased 2.9 percent as new generic drugs -- which tend to have higher profit margins but hurt sales because they are cheaper than name-brand drugs -- entered the market. A lower incidence of flu drove fewer people into pharmacies.

Front-store comparable sales, which includes snacks, beverages and other items, increased 0.7 percent. Customer traffic dropped 0.8 percent, and basket size increased 1.5 percent, Walgreen said.

Sales at Duane Reade stores, which Walgreen bought earlier this year, are not included in comparable store sales. Total sales for the month, which does include Duane Reade stores, were $5.66 billion, up 8.6 percent from August 2009.

Total sales for the fourth quarter that ended August 31 were $16.89 billion, up 7.6 percent from $15.70 billion in 2009.

Analysts were expecting $16.80 billion, according to Thomson Reuters I/B/E/S.

Walgreen also announced Friday that it is acquiring Omnicare Inc's home infusion business, which involves administering drugs and other nursing services at a patient's home. In exchange, Omnicare will pick up Walgreen's long-term care pharmacy business, which served senior living communities.

The transaction is expected to close by November, according to a statement by the companies.

(Reporting by Emily Stephenson, editing by Dave Zimmerman)