Jean Coutu Group saw revenue edge up in its franchised store network for the fiscal 2015 first quarter, while same-store sales were virtually flat despite growth in script count.


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Jean Coutu sees retail store sales uptick in 1Q

July 8th, 2014

LONGUEUIL, Quebec – Jean Coutu Group saw revenue edge up in its franchised store network for the fiscal 2015 first quarter, while same-store sales were virtually flat despite growth in script count.

The Canadian drug chain said Tuesday that for the first quarter ended May 31, total sales at its retail store network rose 0.8% to $1.018 billion (Canadian) from $1.010 billion a year earlier. Revenue grew 0.9% in the pharmacy and 0.3% in the front of the store.

Same-store sales for the store network inched up 0.1% in the quarter, reflecting a 0.3% uptick in the pharmacy sales and a 0.5% decrease in the front end. Sales of over-the-counter drugs, which accounted for 8.7% of total retail sales, dipped 0.1%, compared with a 3.6% gain in the fiscal 2014 quarter, Jean Coutu Group noted.

Prescriptions filled increased 4.2% overall and 3.7% on a comparable-store basis during the quarter.

Jean Coutu Group said generic drugs represented 67.8% of prescriptions in the period, compared with 66% a year earlier. The company reported that in the fiscal 2015 first quarter, the introduction of new generic drugs reduced pharmacy's retail sales growth by 1.1%, while price reductions of generics pared retail pharmacy sales growth by 1.2%.

During the first quarter, there were two store openings, including one relocation, in the franchise network, and six stores were significantly renovated or expanded. As of May 31, Jean Coutu Group had 414 stores in the Quebec, New Brunswick and Ontario under the banners PJC Jean Coutu, PJC Clinique, PJC Santé and PJC Santé Beauté.

"The results of the first quarter of fiscal 2015 demonstrate the effectiveness of our business plan in spite of a highly competitive market," François Coutu, president and chief executive officer of Jean Coutu Group said in a statement. "The commercial strategies that we continue to roll out, the expansion of our network and the commitment of our affiliated pharmacist-owners and their employees will contribute to our growth in the upcoming quarters as well as to maintain our leadership."

On the corporate side, Jean Coutu Group's sales grew 1% in the fiscal 2015 first quarter to $688.6 million from $681.6 million in the prior-year period. The company atttributed the gain to overall market growth and the expansion of the franchised store network, despite the deflationary impact of the volume increase in generic prescriptions and the price reductions of generics.

The company's income consists of sales plus other revenue derived from franchising activities in Canada. Merchandise sales to franchisees through its distribution centers account for most of the company's sales.

Operating income before amortization (OIBA) came in at $82 million for the first quarter, compared with $81.8 million a year earlier.

Jean Coutu Group posted net earnings of $54.1 million, or 29 cents per share, during the first quarter, compared with $108.6 million, or 51 cents per share, in the year-ago period. The decrease reflects a gain of $54.4 million related to the company's investment in Rite Aid recognized during the fiscal 2014 first quarter. Net profit before that gain amounted to $54.1 million, or 29 cents per share, for the fiscal 2015 quarter versus $54.2 million, or 26 cents per share, for the fiscal 2014 quarter.

Gross sales at Pro Doc drugs, Jean Coutu Group's generic drug subsidiary, totaled $48.3 million in the fiscal 2015 first quarter, up 5.7% from $45.7 million a year earlier.

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