TORONTO New pricing and reimbursement pressures drove down Shoppers Drug Mart's third-quarter profit, the Canada-based drug store chain said Wednesday.
Despite a 2.6% increase in third-quarter sales to $3.09 billion, the company said that as a result of drug-system reform initiatives in the country, a reduction in generic prescription reimbursement rates — combined with greater generic prescription utilization — had a negative impact on sales dollar growth in pharmacy. Prescription sales rose a mere 0.8%, accounting for 48.3% of Shoppers' sales mix. Similarly, the chain's third-quarter profit declined 7%.
Meanwhile, front-end store sales rose 4.4% in the third quarter to $1.6 billion, which was driven by growth in core categories, as well as investments in marketing, pricing and promotional activities.
Commenting on the results, Jurgen Schreiber, Shoppers president and CEO said, “Our results for the third quarter met our expectations as we confront the new pricing and reimbursement pressures facing all of us that are invested and engaged in the practice of community pharmacy. To that end, we continue to work hard. ... While much hard work remains, I am confident in the capabilities of our people and believe that as a market leader, we remain well-positioned to execute on our strategic priorities and initiatives and capitalize on the business opportunities that lie ahead.”
During the third quarter, 17 drug stores were opened, 11 of which were relocations, and six smaller drug stores were closed.