Revenue for the Jean Coutu Group's franchised store network climbed for the fiscal 2012 second quarter, and same-store sales inched up despite lackluster growth in the pharmacy.

Jean Coutu Group, second quarter, fiscal 2012, franchised store network, Canadian drug store, pharmacy, front end, same-store sales, retail sales, Rite Aid, PJC Jean Coutu, PJC Clinique, PJC Santé, PJC Santé Beauté, revenue, net profit, operating results, OIBA, generic drug price reductions, generic drugs, prescriptions filled

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Jean Coutu Group turns in 2Q gains

October 4th, 2011

LONGUEUIL, Quebec – Revenue for the Jean Coutu Group's franchised store network climbed for the fiscal 2012 second quarter, and same-store sales inched up despite lackluster growth in the pharmacy.

The parent company also saw sales rise and posted improved operating results and net profit, with the latter getting a lift from the disposal of shares in Rite Aid Corp.

Jean Coutu Group said Tuesday that for the 13 weeks ended Aug. 27, total retail sales for its franchised store network rose 3.2% year over year to $943.1 million (Canadian). Revenue advanced 3% in the pharmacy and 3.7% in the front end. Sales of over-the-counter drugs, which represented 8 % of total retail sales, increased by 2.9%.

Same-store sales for the franchise network edged up 1.2%, as a 2% gain in the front end was diluted by a 0.8% uptick in the pharmacy, the Canadian drug store operator said.

Jean Coutu noted that generic drugs reached 57.2% of prescriptions filled during the second quarter, up from 53.2% a year earlier. The increase in the number of generic drug prescriptions with lower selling prices versus brand-name drugs had a deflationary impact, reducing pharmacy retail sales growth by 2.3%, the company said, adding that generic drug price reductions mandated by the Quebec government also cut the growth of generics sales by 3.6% in the quarter.

The retail network had five store openings in the second quarter, including three relocations. Also, 10 stores were significantly renovated or expanded. As of the quarter's end, the company had 394 franchised stores in Quebec, New Brunswick and Ontario under the banners of PJC Jean Coutu, PJC Clinique, PJC Santé and PJC Santé Beauté.

For the Jean Coutu Group, revenue gained 1.5% to $635.2 million in the second quarter. The company said the increase stems from overall market growth and the expansion of the franchised store network, despite the deflationary effects of generic drug introductions and Quebec's generic drug price reductions.

Operating income before depreciation and amortization (OIBA) increased to $70.8 million from $69.3 million in the prior-year period, which Jean Coutu Group attributed to a strong operational performance in franchising activities.

Meanwhile, net profit for the 2012 second quarter came in at $66.4 million, or 29 cents per share, compared with $43.4 million, or 18 cents per share, a year ago. The company said the improvement mainly reflects a 10-cents-per-share gain from the sale of Rite Aid shares totaling $22 million.

In July, Jean Coutu Group announced a plan to sell about 10% of its equity interest in Rite Aid, or about 25 million of its nearly 252 million common shares of the U.S. drug store chain. The company reported that during the 13 weeks ended Aug. 27 it sold more than 17.57 million common shares of Rite Aid.

"We are very satisfied with our results for the second quarter and first half of fiscal 2012," president and chief executive officer François Coutu said in a statement. "Despite the price reductions of generic drugs, we have posted a significant growth of our operational results, which demonstrates the success of the implementation of our business plan. We intend to confirm our position as leader in the pharmacy industry by continuing the development of
our product offering and our network's expansion and renovation projects."