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VARENNES, Quebec — Jean Coutu Group’s retail store network eked out total and same-store sales gains for the fiscal 2016 third quarter.
On the corporate side, Jean Coutu also reported upticks in revenue, net profit and earnings per share for the quarter, which ended Nov. 28. The EPS result was in line with analysts’ estimates.
The company said Thursday that overall sales for the retail network edged up 0.4% to $1.053 billion (Canadian) from nearly $1.050 billion a year earlier. Revenue rose 2.9% in the front end but was down 1.4% in the pharmacy. Same-store sales came in virtually flat, up 0.1% year over year, reflecting a 2.4% gain in the front of the store and a 1.6% decrease in the pharmacy.
Jean Coutu said sales of nonprescription drugs, which accounted for 9.1% of total retail sales, grew 3.9% in the third quarter, up from 1.6% a year ago.
Prescription count increased 2.5% overall in the quarter and 2.4% on a comparable-store basis. Jean Coutu noted that generic drugs represented 69.8% of prescriptions, up from 68.1% a year earlier. The introduction of new generics reduced pharmacy retail sales growth by 0.9%, while generic drug price cuts trimmed Rx retail sales growth by 0.3%, according to the company.
Jean Coutu added that periodic deductions agreed on by the Ministry of Health and Social Services and the Association québécoise des pharmaciens propriétaires (AQPP) pared the pharmacy retail sales growth by another 3.5%.
During the third quarter, one store was relocated, three stores were significantly renovated or expanded, and one store was closed. As of Nov. 28, Jean Coutu’s retail network encompassed 416 franchised stores in Quebec, New Brunswick and Ontario under PJC Jean Coutu, PJC Clinique, PJC Santé and PJC Santé Beauté banners.
“We are satisfied with the results of the third quarter of fiscal 2016, which demonstrate the relevance of our strategies and the strength of our organization, despite the restrictive regulatory context which prevails in our industry,” Jean Coutu Group president and chief executive officer François Coutu said in a statement. “In the next few months, we will continue to capitalize on dynamic strategic initiatives to maintain our growth and sustain our leadership.”
Revenue for the Jean Coutu Group totaled $749.2 million in the 2016 third quarter, up 1.7% from $736.7 million in the prior-year period. The company said overall market growth fueled the gain, despite the deflationary impact of increased generic drug prescriptions and price reductions.
Jean Coutu’s income consists of sales plus other revenue from franchising activities in Canada, with merchandise sales to franchisees through its distribution centers representing most of the company’s sales.
Third-quarter net earnings came in at $57.8 million, or 31 cents per share, compared with $56 million, or 30 cents per share, in the year-ago period. On average, analysts had forecast EPS at 31 cents, according to Zacks Investment Research.
Operating income before amortization (OIBA) advanced 2.6% to $87 million in the 2016 quarter from $84.8 million a year earlier. Jean Coutu’s generic drug business, Pro Doc Ltd., also turned in gains. Gross sales at Pro Doc totaled $51.7 million for the quarter, compared with $50.7 million in the prior-year period.
