Shoppers Drug Mart posts Q3 results

Company plans to add more enhanced beautyBOUTIQUES

TORONTO — Canadian pharmacy retailer Shoppers Drug Mart posted a 2.4% increase in sales for the third quarter, driven by continued strength in prescription count growth and front-end sales.

For the quarter ended Oct. 5, the company posted sales of Canadian $3.29 billion, up 2.4% compared with the year-ago period. Same-store sales rose 2.2%.

In pharmacy, sales totaled C$1.58 billion, up 2.7% compared with the year-ago period. The company attributed the increase to strong growth in the number of prescriptions filled at retail combined with sales gains in the company’s long-term care business, which were partially offset by further reduction in average prescription value. Pharmacy same-store sales increased 1.8% during the quarter.

Front-end sales increased 2.2% to C$1.71 billion, led by strong growth in cosmetics, OTC medications, and food and confection, the company stated. Shoppers Drug Mart did invest more heavily in promotional activity during quarter in response to heightened competition in the marketplace. The promotional activity provided “effective in driving the increase in average basket size,” the company noted. Front-end same-store sales increased 2.4%.

Including pre-tax costs associated with the pending acquisition of by Loblaw Cos., earnings for the quarter totaled C$166 million compared with C$168 million in the year-ago period. Diluted net earnings per share were 83 Canadian cents compared with 81 Canadian cents in the year-ago period.

As previously reported, Loblaw and Shoppers Drug Mart announced on July 15 a definitive agreement under which Loblaw will acquire Shoppers Drug Mart for C$12.4 billion in cash and stock. In September, shareholders voted in favor of the proposed acquisition, which is expected to close before the end of the first quarter 2014.

"We are pleased with our third quarter results. In what was an eventful quarter for our company, we continued to execute on our strategic priorities and initiatives while never compromising on our commitment to providing the best in patient care and customer service. For that, I would like to thank our employees, associate-owners and their teams at store level for their efforts and contributions in what is also a very challenging economic, competitive and regulatory environment,” Domenic Pilla, president and CEO stated. “The pending acquisition of the company by Loblaw Cos. Ltd. will change the retail landscape in this country by bringing together Canada's leading food and pharmacy retailers. And while this transaction must still be reviewed and approved by the Competition Bureau, we are excited by the prospects of new growth opportunities, enhancing our product and service offering and meeting the challenges facing our collective teams."

During a conference call with analysts Tuesday afternoon, Pilla said the company’s two enhanced BeautyBOUTIQUES are “performing above expectations” and plans are in place to expand the roll out.

As previously reported by Drug Store News, the company unveiled its second enhanced beautyBOUTIQUE at the Toronto Eaton Centre in August. The first enhanced BeautyBOUTIQUE opened in November 2012 in an existing Shoppers Drug Mart store in Bayview Village in Toronto.

“We definitely intend to add more enhanced BeautyBOUTIQUES to our offer in the near future,” Pilla told analysts.

With regard to its more traditional BeautyBOUTIQUES, the company will end the year with about 348 BeautyBOUTIQUES and, going forward, looks to continue to the expand the product mix and number of BeautyBOUTIQUES.

The company is also pleased with the performance of the e-commerce component of, the web site for its luxury beauty destination Murale. The site’s launch was announced in April 2012.

“That continues to growth steadily as well as giving us great learnings on how we could deploy an e-commerce strategy in the rest of our business,” said Pilla. “So, Murale has been a great platform to work with the brands and continues to be performing well and provides us with a laboratory or learning opportunity around our e-commerce strategy.”



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