Retail News Breaks Archives
Sales, scripts climb in 3Q at Shoppers Drug Mart
November 12th, 2013
TORONTO – Shoppers Drug Mart Corp. saw sales and net earnings per share rise for its third quarter, with EPS exceeding analysts' consensus estimate by a penny.
The Canadian drug chain, which is being acquired by Loblaw Cos., said Tuesday that revenue for the 16-week third quarter ended Oct. 5 rose 2.4% to $3.29 billion (Canadian) from $3.21 billion a year earlier. Robust growth in prescription count and front-end sales, where basket size increased on steady customer traffic, contributed to overall sales gains, according to the company.
Same-store sales were up 2.2% in the third quarter, reflecting increases of 2.4% in the front end and 1.8% in the pharmacy.
Prescriptions filled at retail climbed 4.1% on a comparable-store basis and 5.3% overall during the quarter. Shoppers Drug Mart said that, in line with recent quarterly trends, pharmacy volume growth remains strongest in Ontario and Alberta.
Year over year, average prescription value at retail fell 2.7% during the third quarter, primarily due to further reductions in generic drug reimbursement rates stemming from provincial drug system reform efforts, as well as due to increased utilization of generics, which carry lower prices but higher margins. Generics accounted for 61.6% of prescriptions dispensed in the quarter, compared with 60.1% a year earlier.
Pharmacy sales totaled $1.58 billion in the third quarter, up 2.7% versus the prior-year period as strong growth in the number of prescriptions filled at retail, combined with sales gains in the company's long-term care business, were partially offset by a further reduction in average prescription value, according to Shoppers Drug Mart. In the quarter, pharmacy sales represented 48.1% of the sales mix, compared with 48% a year ago.
Front-of-store revenue for the third quarter increased 2.2% to nearly $1.71 billion, led by strong growth in cosmetics, over-the-counter medications, and food and confection, the retailer said, adding that it invested more heavily in promotional activity in the quarter, which helped grow average basket size.
On the earnings side, net income totaled $165.8 million, or 83 cents per share, in the third quarter compared with $167.7 million, or 81 cents per share, a year earlier. The EPS result for the 2013 quarter topped analysts' average forecast of 82 cents, according to Zacks Investment Research.
Shoppers Drug Mart noted that third-quarter net earnings reflect pretax, transaction-related costs of $14 million from its pending acquisition by Loblaw, while prior-year net income includes a $13 million pretax charge from a rationalization of the drug chain's central office functions. Excluding the impact of those items, Shoppers Drug Mart's adjusted net EPS (diluted) was 88 cents in the 2013 quarter and 85 cents in the year-ago period. The company added that adjusted net earnings per share for both years included comparable pretax gains on disposal of $13 million in respect of sale-leaseback transactions.
"We are pleased with our third-quarter results. In what was an eventful quarter for our company, we continued to execute on our strategic priorities and initiatives while never compromising on our commitment to providing the best in patient care and customer service. For that, I would like to thank our employees, associate-owners and their teams at the store level for their efforts and contributions in what is also a very challenging economic, competitive and regulatory environment," Shoppers Drug Mart president and chief executive officer Domenic Pilla said in a statement.
"The pending acquisition of the company by Loblaw Cos. Ltd. will change the retail landscape in this country by bringing together Canada's leading food and pharmacy retailers," Pilla added. "And while this transaction must still be reviewed and approved by the Competition Bureau, we are excited by the prospects of new growth opportunities, enhancing our product and service offering and meeting the challenges facing our collective teams."
Shoppers Drug Mart reported that it expects the acquisition transaction, approved by its shareholders in September, to close before the end of the 2013 first quarter. The $12.4 billion (Canadian) cash and stock deal was announced in July.
The drug chain said it opened six new drug stores, including relocation, and completed five major drug store expansions during the third quarter, as well as closed three smaller outpatient hospital pharmacies.
As of Oct. 5, Shoppers Drug Mart's retail network totaled 1,369 stores, including 1,246 Shoppers Drug Mart/Pharmaprix drug stores, 55 Shoppers Simply Pharmacy/Pharmaprix Simplement Santé drug stores, 62 Shoppers Home Health Care stores and six Murale luxury beauty stores.