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Jean Coutu sees sales rise in 3Q
January 10th, 2013
LONGUEUIL, Quebec – Pricing pressure on prescriptions from government-mandated reductions didn't prevent the Jean Coutu Group drug stores from growing revenue and same-store sales for the fiscal 2013 third quarter.
The Canadian chain drug retailer said Thursday that for the third quarter ended Dec. 1, 2012, total sales for its franchised store network rose 3.5% to nearly $1.02 billion (Canadian) from $984.3 billion a year earlier. Revenue climbed 3.7% in the pharmacy and 2.8% in the front end.
On a comparable-store basis, third-quarter sales were up 2.6%, reflecting gains of 2.7% in the pharmacy and 2% in the front of the store. Prescription count climbed 4.8% on a same-store basis and by 5.9% overall.
Sales of over-the-counter drugs, which accounted for 8.9% of total retail sales, increased 2.2% in the third quarter versus 1.6% a year ago, Jean Coutu noted.
Generic drugs represented 61.8% of prescriptions in the quarter, up from 57.2% in the prior-year period. The introduction of lower-priced generics negatively impacted pharmacy retail sales growth by 2.3%, and price reductions of generics instituted by Quebec pared the growth of those sales by 1% in the quarter, according to the company.
During the third quarter, the franchise network opened five stores, including one relocation, and closed one store, while five stores had major remodels or expansions. As of Dec. 1, the network comprised 405 stores in Quebec, New Brunswick and Ontario under the banners of PJC Jean Coutu, PJC Clinique, PJC Santé and PJC Santé Beauté.
"We are very satisfied with the results of the third quarter of fiscal 2013 and with the excellent performance of our network, whose sales have reached over $1 billion during this period," Jean Coutu Group president and chief executive officer François Coutu said in a statement. "The contribution of our affiliated pharmacists and their employees is essential to the success of our organization."
Corporate revenue, meanwhile, increased 2.4% to $716.6 million in the fiscal 2013 third quarter. Jean Coutu attributed the gain to overall market growth and the expansion of the franchised store network, despite the deflationary impact from new generics and provincial price cuts on generics. The company's revenue comes mainly from franchising activities and merchandise sales to franchisees.
Operating income before amortization (OIBA) grew 6.5% in the quarter to $85.1 million.
On the earnings side, net income rose in the third quarter to $56.2 million, or 26 cents per share, from $51.7 million, or 23 cents per share, in the year-ago period. Jean Coutu said the gain stems primarily from a solid operational performance by the company's Pro Doc generic drug subsidiary and franchising activities.
François Coutu added that improved financial results at Rite Aid Corp., in which Jean Coutu Group holds an almost 20% equity stake, bode well for his company.
"The notable positive results of Rite Aid during the quarter ended Dec. 1, 2012, allow us to look forward to next year with optimism," he stated.
Jean Coutu Group reported that a strong rise in net earnings for the 39-week fiscal year-to-date period ended Dec. 1 came largely from a $348 million gain related to its investment in Rite Aid, compared with a gain of $22 million in the year-ago period.