Shoppers Drug Mart said top-line growth helped fuel a solid earnings gain for its second quarter.

Shoppers Drug Mart, second quarter, earnings, sales, same-store, revenue, Jurgen Schreiber, Russell Redman, drug store, pharmacy, front end, Pharmaprix, Murale

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Sales, profit up in 2Q at Shoppers Drug Mart

July 22nd, 2010

TORONTO – Shoppers Drug Mart said top-line growth helped fuel a solid earnings gain for its second quarter.

The Toronto-based drug store chain said Thursday that for the 12 weeks ended June 19, sales rose 5% year over year to $2.4 billion (Canadian), with the company continuing to experience sales growth in all regions of the country. Prescription sales climbed 5.1%, while front-end revenue was up 4.8%.

On a same-store basis, sales edged up 2.7% during the quarter, reflecting increases of 3.5% in the pharmacy and 2% in the front end.

Shoppers Drug Mart said that consistent with trends in recent years, prescription sales growth was driven mainly by strong growth in the number of prescriptions filled, while increased generic utilization continued to have a deflationary impact. Meanwhile, sales gains in core categories helped drive the rise in front-end business, according to the retailer.

On the earnings side, net income in the second quarter advanced 6.2% to $145 million, or 66 cents per diluted share, from $136 million, or 63 cents per diluted share, a year earlier. Shoppers Drug Mart noted that the earnings result was achieved before the impact of any proposed and/or announced provincial drug system reform initiatives, some of which came into effect on July 1.

According to the company, the second-quarter earnings gain stemmed from revenue growth, improved purchasing synergies and further improvements in productivity and efficiency, the benefits of which were partially offset by increased amortization and higher operating expenses at store-level associated with the network growth and expansion initiatives, along with continued investments in pricing and promotional activities aimed at spurring front-end sales growth. 

"We are pleased with our second-quarter and year-to-date results, particularly in light of these challenging times for consumers and for the business of community pharmacy," Jürgen Schreiber, Shoppers Drug Mart president and chief executive officer, said in a statement.

"Looking forward, I am confident that the strength of our business model, combined with the dedication and commitment of our employees and our associate-owners and their teams at store-level, have us capably equipped to execute upon our strategic priorities and initiatives and enhance our reputation as a service leader in community pharmacy as we adjust to the pricing and reimbursement pressures facing all participants in our industry," Schreiber added. "In spite of these challenges, I believe that we are well-positioned to gain share, grow the business and remain the cost-effective leader in patient care and customer service."

During the second quarter, Shoppers Drug Mart opened 21 drug stores, 13 of which were relocations, and closed three smaller drug stores. The retailer also added one Murale luxury beauty store.

At the quarter's end, the retailer had 1,309 stores, including of 1,239 drug stores (1,180 Shoppers Drug Mart/Pharmaprix stores and 59 Shoppers Simply Pharmacy/Pharmaprix Simplement Santé stores), 63 Shoppers Home Health Care stores and seven Murale beauty stores. Retail selling space was approximately 12.5 million square feet at the end of the quarter, up 8.6% versus a year ago.