CEO François Coutu: Retail sales have 'grown significantly'
VARENNES, Quebec — Jean Coutu Group saw retail and corporate sales climb for the fourth quarter and full year of fiscal 2017.
Adjusted earnings per share also were in line with analysts’ expectations, with year-end EPS topping the consensus estimate.
Jean Coutu Group said Thursday that for the 14-week fourth quarter ended March 4, revenue for the franchised store network totaled $1.24 billion (Canadian), up 4.4% from $1.11 billion in the 13-week fiscal 2016 quarter. Sales rose 5.2% in the front end and 3.8% in the pharmacy.
Same-store sales in the quarter grew 4% (on a comparable-weeks basis), reflecting gains of 4.4% in the front end and 3.7% in the pharmacy.
Prescription count rose 3.7% overall in the fourth quarter and 3.6% on a same-store basis. Generic drugs represented 71.4% of prescriptions, up from 70.3% a year earlier. Jean Coutu said the introduction of new generics reduced pharmacy retail sales growth by 0.6% in the quarter, while generic drug price reductions trimmed pharmacy retail sales growth by another 0.3%.
Sales of over-the-counter medicines, which accounted 9.1% of retail sales in the quarter, were up by 5.8% versus a 2.6% decrease in the prior-year period.
For the 53-week 2017 fiscal year, Jean Coutu’s franchised stores posted sales of over $4.47 billion, up 3.1% from nearly $4.26 billion in the 52-week 2016 fiscal year. Revenue advanced 4.2% in the front end and 2.6% in the pharmacy.
Fiscal 2017 same-store sales edged up 2.7% (on a comparable-weeks basis), including increases of 3.5% in the front end and 2.4% in the pharmacy. Dispensed prescriptions grew 3.8% overall and 3.6% on a same-store basis. Sales of OTC drugs, which represented 8.9% of total retail sales, increased 4.4% versus 1.6% in fiscal 2016.
“We are pleased with the results for fiscal 2017. Our network’s retail sales have grown significantly over the last 12 months, particularly in the fourth quarter, despite a highly competitive environment, thus reflecting the effectiveness of our business strategies and their implementation,” François Coutu, president and chief executive officer of Jean Coutu Group, said in a statement. “In the coming year, we will continue to implement our strategic plan and make every effort to continue our growth.”
On the corporate side, Jean Coutu Group totaled revenue of $789.4 million for the 2017 fourth quarter, up 11.7% from $706.6 million a year earlier. Fiscal 2017 full-year sales rose 4.3% to $2.98 billion from $2.85 billion in 2016. The company said the revenue gain reflects the extra week in fiscal 2017, overall market growth and increased sales by the commercial section of its distribution centers.
Jean Coutu Group’s corporate income consists of sales and other revenue from franchising activities in Canada, with merchandise sales to franchisees through its distribution centers representing most of the company’s sales.
Net earnings for the fiscal 2017 fourth quarter were $47.8 million, or 26 cents per share, down from $51.5 million, or 28 cents per share, a year ago. Full-year fiscal 2017 net income came in at $199.5 million, or $1.08 per share, compared with $213.7 million, or $1.14 per share, in fiscal 2016. Jean Coutu said the decline stems mainly from the lower contribution of Pro Doc generic drug business and increased general and operating expenses from the company’s transition to the Varennes corporate headquarters.
Analysts, on average, projected Jean Coutu’s adjusted EPS at 26 cents for the fourth quarter and $1.04 for the full year, according to Zacks Investment Research.
Jean Coutu said operating income before amortization (OIBA) declined to $75.8 million in the fiscal 2017 fourth quarter from $79.6 million in the year-ago period. Full-year 2017 OIBA totaled $311.2 million, down from $331.3 million in fiscal 2016.
During fiscal 2017, Jean Coutu’s retail network opened eight stores, including three relocations, remodeled 10 stores and closed four stores. The company finished the year with 418 stores overall in Quebec, New Brunswick and Ontario under the PJC Jean Coutu, PJC Santé and PJC Santé Beauté banners.
Plans call for Jean Coutu to open 13 stores, including eight relocations, and complete 20 store renovation and expansion projects in fiscal 2018.
Jean Coutu Group also noted that a key regulatory change brings good news to pharmacists in the area of professional allowances.
Earlier this month, the company said, the Association Québécoise des Pharmaciens Propriétaires (AQPP) ratified an agreement in principle with the Ministry of Health and Social Services that will end periodic withdrawals on pharmacist fees that had been in effect since Jan. 28 and were slated to continue to 2019. Under the accord, the government will restore to 15% the ceiling on professional allowances that may be paid by generic drug manufacturers to pharmacists.