The Jean Coutu Group and its franchised drug store network saw sales rise slightly in the fiscal 2012 first quarter, and the company reported a year-over-year profit gain.


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Quarterly sales edge up at Jean Coutu Group

July 5th, 2011

LONGUEUIL, Quebec – The Jean Coutu Group and its franchised drug store network saw sales rise slightly in the fiscal 2012 first quarter, and the company reported a year-over-year profit gain.

The Canadian drug store operator said Tuesday that revenue for its franchised stores rose 2.9% to $957.2 million (Canadian) for the 13-week first quarter ended May 28. Sales were up 3.4% in the front end and 2.2% in the pharmacy.

Same-store sales in the franchise network inched up 0.9% in the quarter, reflecting gains of 1.6% in the front end and 0.1% in the pharmacy.

Jean Coutu noted that during the first quarter, generic drugs accounted for 56.5% of prescriptions, compared with 51.4% a year earlier, which had a deflationary impact on the pharmacy's retail sales. The company said the introduction of new generic drugs reduced pharmacy sales growth by 3.4%, while price reductions of generic drugs mandated by the Quebec government trimmed the growth of those sales by 2.8%.

Sales of nonprescription drugs, which represented 9% of retail sales in the first quarter, rose 6.6%, up from a 2.2% gain in the prior-year period, Jean Coutu reported.

Meanwhile, revenue for the Jean Coutu Group edged up 2.2% to $660.6 million in the first quarter. The company attributed the increase to overall market growth and the expansion of the franchised store network. Merchandise sales to franchisees through Coutu distribution centers account for most of the company's revenue.

On the earnings side, first-quarter 2012 net profit climbed to $49.9 million, or 22 cents per share, from $43.9 million, or 19 cents per share, a year earlier. That topped financial analysts' consensus estimate of 20 cents per share for the 2012 quarter.

Jean Coutu also reported that operating income before depreciation and amortization (OIBA) rose 9.7% to $77.1 million in the quarter, which it attributed primarily to a strong operational performance in its franchising activities and its Pro Doc generic drug subsidiary.

"We are very satisfied with the results of the first quarter of fiscal 2012. Despite the price reductions of generic drugs decreed by the provincial governments, we have posted a significant growth of our operational results, which demonstrates the relevance of our strategies and the strength of our organization," president and chief executive officer François Coutu said in a statement. "We have started fiscal 2012 with optimism and remain confident that we will be reaching the objectives that we have set."

During the first quarter, Jean Coutu's franchise network had seven store openings, including three relocations, and one store closure. Also, nine stores were significantly remodeled or expanded.

Currently, the network has 392 franchised stores in Quebec, New Brunswick and Ontario under the banners PJC Jean Coutu, PJC Clinique, PJC Santé and PJC Santé Beauté.

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