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VARENNES, Quebec — Retail and corporate sales climbed at Jean Coutu Group in the fiscal 2018 second quarter, the first reporting period since its $4.5 billion (Canadian) deal to be acquired by Metro Inc.
Net profit per share in the quarter ended Sept. 2 topped analysts’ consensus forecast but came in two cents less than a year ago.
For Jean Coutu’s network of franchised stores, sales totaled $1.102 billion for the second quarter, up 4.1% from nearly $1.059 billion a year earlier. Revenue rose 3.7% in the front end and 4.6% in the pharmacy.
Same-store sales in the retail network grew 4% year over year, reflecting gains of 3.4% in the front of the store and 4.6% in the pharmacy.
Prescription count rose 3.1% overall and on a same-store basis. Over-the-counter drug sales, which accounted for 8.5% of total retail sales, increased by 5.5% compared with 5.1% in the prior-year period.
Generic drugs represented 72% of prescriptions in the second quarter, up slightly from 71.3% a year ago. Jean Coutu said new generic drug introductions pared retail pharmacy sales growth by 0.2%, while generic price reductions had a 0.5% negative impact. The company noted that the cessation of periodical withdrawals by the Ministry of Health and Social Services in April lifted pharmacy retail sales in the quarter by 1.4%.
The retail network had one store relocation in the quarter. As of the end of the period, Jean Coutu operated a network of 419 franchised stores under the banners of PJC Jean Coutu, PJC Santé and PJC Santé Beauté in Quebec, New Brunswick and Ontario.
“During the second quarter, network retail sales and front-end sales of our distribution centers showed a noticeable increase despite a still very competitive environment,” Jean Coutu Group president and chief executive officer François Coutu said in a statement. “We will continue to make the necessary efforts to promote retail sales growth and maintain our leadership.”
On the corporate side, second-quarter sales climbed 6.1% to $744.3 million from $701.2 million a year earlier. The company’s revenue come mainly from merchandise sales to franchised stores through its two distribution centers and other franchising activities.
Net earnings in the quarter totaled $47.8 million, or 26 cents per share, compared with $51.5 million, or 28 cents per share, a year ago. Jean Coutu attributed the decrease primarily to a decline in the net profit of its Pro Doc generic drug subsidiary.
On average, analysts projected Jean Coutu’s second-quarter earnings per share at 24 cents, according to Zacks Investment Research
Jean Coutu said operating income before amortization (OIBA) fell to $74.6 million, or 10% of revenue, in the 2018 quarter from $78.5 million, or 11.2% of revenue, in the 2017 quarter.
Next month, Jean Coutu Group shareholders are slated to vote on the company’s proposed acquisition by Metro in a special meeting. The Jean Coutu board has unanimously approved the agreement, which is expected to close in the first half of 2018, pending regulatory approvals and other customary closing conditions.
Combined, Metro and Jean Coutu would form a $16 billion food and drug retailer with 1,307 stores — including 677 pharmacy locations — in Quebec, Ontario and News Brunswick.
