Growth in pharmacy lifts revenue, same-store sales

BRAMPTON, Ontario — Led by the pharmacy, Shoppers Drug Mart saw sales climb as parent Loblaw Cos. reported financial results for the 2017 third quarter.

Loblaw said Wednesday that for the 16 weeks ended Oct. 7, Shoppers Drug Mart totaled revenue of $3.751 billion (Canadian), up 3.8% from $3.613 billion a year earlier. Pharmacy sales rose 5.1% to $1.82 billion from $1.732 billion, while sales in the front end came in at $1.931 billion, up 2.7% from $1.881 billion.

Same-store sales in third quarter at Shoppers Drug Mart rose 3.3%, reflecting gains of 3.9% in the pharmacy and 2.8% in the front of the store.

On a comparable-store basis, prescription count grew 4.3%, compared with 2.6% a year ago, and the average prescription value dipped 0.6%, versus 0.8% decrease in the prior-year period.

Third-quarter retail sales at Loblaw, including its food and drug stores, were virtually flat, up 0.2% to $13.923 billion from $13.891 billion a year ago. Operating income jumped to $1.168 billion in the quarter from $642 million in the prior-year period, mainly due to the $540 million sale of its gas bar operations in July. Adjusted gross profit increased 4.3% to $3.874 billion from $3.714 billion.

Food retail sales totaled $10.172 billion in the third quarter, down 1% from $10.278 billion in the 2016 quarter (16 weeks). Same-store sales inched up 1.4%, the same as a year ago. Loblaw said its supermarkets saw moderate food sales growth and flat pharmacy sales in the third quarter.

“We delivered solid results in the third quarter in an increasingly competitive market,” Loblaw Cos. chairman and chief executive officer Galen Weston said in a statement. “In an industry that is facing significant financial headwinds, we remain focused on delivering shareholder value. Our strong balance sheet and free cash flow enable us to continue to return capital to shareholders and to invest to bring innovation to Canadian consumers.”

On the corporate side, including Loblaw’s financial services and properties business, overall revenue for the third quarter was $14.192 billion, up 0.3% from $14.143 billion. Retail sales accounted for nearly 72% of total sales in the quarter.

Net earnings came in at $883 million, or $2.24 per diluted share, compared with $419 million, or $1.03 per diluted share, a year earlier, attributable primarily to a $432 million ($1.10 per share) gain on the sale of gas bar operations, Loblaw said.

Adjusted earnings were $549 million, or $1.39 per share, versus $512 million, or $1.26 per share, a year ago. Analysts’ consensus estimate was for adjusted earnings per share 0f $1.30, according to Zacks Investment Research.

For the 12 months through the third quarter, Loblaw opened 27 food and drug stores and closed 13 stores, resulting in a 0.6% net increase in retail square footage.

The Loblaw Cos. retail network encompasses about 2,500 corporate, franchised and associate-owned stores, including more than 1,050 grocery stores — including 500-plus in-store pharmacies — and over 1,300 Shoppers Drug Mart/Pharmaprix drug stores.