Jean Coutu Group and its franchised drug store network saw robust sales gains for the fiscal 2012 fourth quarter and ended the year on an up note.

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Jean Coutu Group finishes strong in fiscal 2012

May 3rd, 2012

LONGUEUIL, Quebec – Jean Coutu Group and its franchised drug store network saw robust sales gains for the fiscal 2012 fourth quarter and ended the year on an up note.

The Canadian pharmacy retailer also reported increased profit, exceeding the earnings-per-share (EPS) forecast of financial analysts.

Jean Coutu said Thursday that for the 14-week fourth quarter ended March 3, total sales for its franchised stores rose 4.9% year over year to about $1.12 billion (Canadian). Revenue was up 5.1% in the pharmacy and 4.9% in the front end.

Same-store sales for the store network climbed 4.2% in the quarter, with comparable-store sales rising 4.4% in the pharmacy and 4.2% in the front end.

Sales of over-the-counter drugs, about 9.1% of total retail sales in the fourth quarter, increased by 3.2% for comparable periods, compared with an 8.5% gain in the prior-year period, according to Jean Coutu.

Prescription count rose 6.5% overall in the fourth quarter and 5.7% on a comparable-store basis. The company noted that generic drugs rose to 57.4% of prescriptions in the quarter from 55.6% a year earlier, which had a 0.8% deflationary impact on pharmacy retail sales. Price reductions of generic drugs instituted by the Quebec government also pared pharmacy sales by 1.8% in the quarter.

Jean Coutu said store network year-over-year growth data for the fourth quarter and full year reflect a comparable number of weeks, since fiscal 2011 had a 13-week fourth quarter and 52-week year.

For the fiscal 2012 full year, the store network's revenue climbed 3.8% to just over $4 billion, including gains of 3.7% in the pharmacy and 3.9% in the front end. Same-store sales for fiscal 2012 grew 2.3%, reflecting increases of 2% in the pharmacy and 2.6% in the front end. Prescriptions filled advanced 7.3% overall and were up 5.5% on a comp-store basis for the year.

Jean Coutu's retail network opened 20 drug stores, including nine relocations, during fiscal 2012. Also, one store was closed and 28 stores were significantly remodeled or expanded. As of the fiscal year-end, the chain had 399 stores in Quebec, New Brunswick and Ontario under the PJC Jean Coutu, PJC Clinique, PJC Santé and PJC Santé Beauté banners.

"The results of the fourth quarter and fiscal 2012 speak for the excellent performance of our organization," François Coutu, president and chief executive officer of Jean Coutu Group, said in a statement. "We have successfully continued the implementation of our business plan, allowing us to post a significant growth of the net profit despite the price reduction of generic drugs.

"Over the coming year, we will spare no effort to pursue our growth," he added. "We will continue to ensure the development of our offer, and we will implement effective marketing strategies in order to contribute to an increase of the retail sales of the PJC network."

For the Jean Coutu Group, total revenue jumped by 11.7% to $737.2 million in the fourth quarter and by 4.6% to $2.73 billion for the fiscal 2012 year. The company attributed the increase to the fiscal year's additional week, overall market growth and expansion by the franchised stores, despite the negative impact of generic drug introductions and generic drug price cuts by the Quebec government.

Gross sales in the company's Pro Doc generic drug manufacturing subsidiary rose by 11.2% to $41.6 million in the fourth quarter and by 2.7% to $148.3 million for fiscal 2012.

Jean Coutu Group posted net earnings of $62 million, or 28 cents per share, during the fourth quarter, compared with $46.5 million, or 20 cents per share, a year earlier. For all of fiscal 2012, net profit came in at $230 million, or $1.03 per share, versus $182.6 million, or 78 cents per share, in fiscal 2011.

Analysts had projected Jean Coutu's EPS at 28 cents for the fourth quarter and 88 cents for fiscal 2012.

Operating income before depreciation and amortization (OIBA) increased by 11.8% in the fourth quarter to $83.4 million and by 7.1% to $311.2 million for fiscal 2012 overall.