LONGUEUIL, Quebec — Despite the deflationary impact of generic drug price reductions, Jean Coutu Group and its franchised store network turned in solid sales gains for the fiscal 2012 third quarter.
The parent company, too, posted improved operating results and net income in the quarter ended Nov. 26, with earnings per share besting the consensus analyst estimate by a penny.
Total retail sales for Jean Coutu’s franchised store network climbed 4.1% to $984.3 million (Canadian) in the third quarter from $945.5 million a year earlier. Revenue was up 4.2% in the pharmacy and 3.5% in the front end, the company said.
Sales of over-the-counter drugs, which represented 9% of total retail sales in the quarter, increased by 1.6%, compared with a 2% decrease in the prior-year period, Jean Coutu noted.
Same-store sales for the franchise network rose 2.6% for the third quarter, reflecting gains of 2.6% in the pharmacy and 2.3% in the front end. A year ago, comparable-store sales were flat.
Meanwhile, the prescription count increased 7% overall and 5.4% on a same-store basis in the third quarter, the drug chain said. Generic drugs accounted for 57.2% of prescriptions during the period versus 55% a year earlier. According to the company, the introduction of new generic drugs reduced pharmacy’s retail sales growth by 0.7%, while generic drug price reductions by the Quebec government — to 30% of the brand-name drug’s price — had a 3.5% negative impact on sales in the quarter.
In the third quarter, the franchise network had two new store openings, including one relocation, and eight stores had major remodels or expansions. As of the quarter’s end, the network encompassed 395 franchised stores in Quebec, New Brunswick and Ontario under the PJC Jean Coutu, PJC Clinique, PJC Santé and PJC Santé Beauté banners.
"The excellent performance of our organization and of our network translated into solid third-quarter fiscal 2012 results despite the deflationary impact of the introduction of the generic version of large-volume drugs as well as the price reductions of generic drugs," Francois Coutu, president and chief executive officer of Jean Coutu Group, said in a statement. "We successfully continued to implement our business plan, allowing us to post a significant growth of our operating results. We are committed to undertake all actions required to maintain our growth and confirm our position as a leader in the pharmacy industry."
For the Jean Coutu Group, fiscal 2012 third-quarter revenue edged up 2.8% to $700.1 million from $681.1 million in the year-ago period. The company attributed the gain to overall market growth and the expansion of the franchised store network.
Operating income before depreciation and amortization (OIBA) rose 4.7% in the quarter to $79.9 million, driven primarily by a strong operational performance in franchising activities, Jean Coutu said. Net profit grew to $51.7 million, or 23 cents per share, exceeding the consensus analyst forecast of 22 cents as well as the prior-year earnings per share of 21 cents, when net income totaled $48.8 million.
Gross sales of Pro Doc drugs, Jean Coutu’s generic drug manufacturing subsidiary, declined to $37.1 million in the third quarter from $42 million a year earlier. Yet Pro Doc’s contribution to consolidated OIBA increased to $15.4 million in the quarter from $14.8 million in the prior-year period.
