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Consumables, tobacco, BPC see big sales boosts at Family Dollar in FY2013

BY Alaric DeArment

MATTHEWS, N.C. — More than 1,000 new and relocated stores and an increase in a partnership with supply chain services firm McLane Co. were among the highlights in fourth quarter fiscal year 2013 at Family Dollar, the discount store chain said Wednesday.

The company opened 500 new stores during the fiscal year and relocated, renovated or expanded 830, and plans to open another 525 and redo 850 in fiscal year 2014. Chairman and CEO Howard Levine said in a conference call with financial analysts Wednesday morning that by the end of the fiscal year about 75% of the chain will "reflect a much-improved shopping experience."

Tobacco products are helping to drive trips at the 7,900-store chain, with Levine calling them a "nice byproduct" of its refrigerated and frozen food supply chain and relationship with McLane. Basket sizes have remained consistent since the company added tobacco. "The McLane relationship continues to be a key differentiator and accretive to earnings," president and COO Mike Bloom said during the call, adding that the average ticket with tobacco and other items is about $17. Bloom also said the company launched about 1,000 new SKUs in food, health and beauty. Total sales for private labels increased by about 10% and by 20% for private label consumables; the company plans to introduce about 200 private-label SKUs in fiscal year 2014.

On the logistics front, the company is rolling out a pallet delivery program, which streamlines freight delivery and restocking, placing goods on pallets according to department and allowing them to be cleanly stacked and taken directly to the sales floor. Bloom said the new system had increased efficiency and was popular with employees, and that it was planning on rolling it out to all its distribution centers. Meanwhile a new surveillance system called Checkpoint will offer "superior technology at a lower cost" and allow the tagging process to be taken upstream to distribution centers and suppliers, freeing up store employees to improve customer service.

The company reported sales of $2.5 billion, a 5.8% increase over fourth quarter 2012, as well as fiscal 2013 sales of $10.4 billion, an 11.4% increase over fiscal year 2012’s $9.3 billion. Profits were $102.2 million for the quarter and $443.6 million for the fiscal year, compared with $80.9 million and $422.2 million, respectively, during the same periods last year. Same-store sales in the fourth quarter were flat, as was average customer transaction value, while increasing by 3% for the fiscal year, thanks largely to increased customer traffic and ab increase in average customer transaction value. Overall, food, health and beauty aids, tobacco and other similar categories saw a 16.9% increase in sales during the year and an 8.3% increase during fourth quarter.

Looking ahead, Levine said the company would be cautious in fiscal year 2014 given the challenges faced by consumers, such as higher taxes, uncertainly in Washington and a tepid economy. The company expects a mid-single-digit increase in total net sales and a low-single-digit increase in same-store sales. In addition, CFO Mary Winston said the company expects the Patient Protection and Affordable Care Act to cost the company between $10 to $12 million, calling it "a big headwind."

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Jean Coutu Group profits soar in Q2

BY Alaric DeArment

LONGUEUIL, Quebec — The Jean Coutu Group reported sales of C$653.8 million in second quarter 2014, compared with C$658.7 million in second quarter 2013.

The 411-store Canadian retail pharmacy franchising company also reported sales for the first half of fiscal year 2014 of C$1.335 billion, compared with C$1.34 billion in the first half of fiscal year 2013. The decrease was due to the deflationary effects of generic drugs. However, the selloff of the company’s shares in Rite Aid yielded gains of C$158.3 million during the quarter. Profit for the quarter was C$208.2 million, compared with C$51.2 million in second quarter 2013; the increase was due to the sales of Rite Aid shares, without which profits would be about C$50 million, though earnings per share would still have been 24 Canadian cents, compared with 23 cents in second quarter 2013.

Same-store sales grew by 0.3%, including a 0.3% decrease in pharmacy comps and a 1% increase in front-end comps. OTC drugs saw a 2.5% increase in comps, compared with a 2.2% increase during the same period last year. Generic drugs accounted for 67.2% of prescriptions, compared with 61% during the same period last year, and the introduction of new generics decreased sales growth by 2.2%, while generic drug price reductions decreased growth of those sales by 1.1%.

In a conference call with financial analysts Wednesday morning, Jean Coutu president and CEO François Coutu said that the company would be able to continue its business strategies without having to take on debt, but that opportunities for acquisitions were largely limited to independent pharmacies, after Loblaw’s planned acquisition of Shoppers Drug Mart.

"I think in the future, you’ll definitely see more opportunities for buying independents," Coutu said, saying that the company was looking forward to expanding in Ontario and neighboring provinces. "We have the will to expand," Coutu said. "It just has to be done in the right way."

During the quarter, the company opened seven new franchised stores, including two relocations and one closing, while two stores were significantly renovated or expanded. Coutu said the company was looking to expand its beauty offerings.

Health and beauty is how Jean Coutu hopes to differentiate itself as Target and Walmart expand in Canada, Coutu said, adding that the company’s performance was strongest in the inner cities, while the larger retailers were having a stronger effect in the suburbs. "At the same time, we try to differentiate ourselves especially as far as the pharmacy is concerned because when you want to fill a prescription, you want the convenience," Coutu said. "If [customers] come for their pharmacy needs, they also shop for health and beauty, so I think that’s what the strength of Jean Coutu is all about." By contrast, people shopping at Target and Walmart are usually looking for items like clothing and seasonal goods, he said, but Jean Coutu would be "watchful" nonetheless.

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FDA approves Adempas to treat pulmonary hypertension

BY Sierra McCleary-Harris

SILVER SPRING, Md. — The Food and Drug Administration today approved Adempas, also known as riociguat, to treat adults with two forms of pulmonary hypertension, which is caused by abnormally high blood pressure in the arteries of the lungs.

Adempas is intended for patients with chronic thromboembolic pulmonary hypertension, or CTEPH, after surgery or patients who cannot undergo surgery, to improve their ability to exercise. Adempas is also indicated for patients with pulmonary arterial hypertension, or PAH, of unknown causes, inherited or associated with connective tissue diseases, to improve their ability to exercise and to delay clinical worsening of their condition.

“Adempas is the first in its drug class approved to treat pulmonary hypertension and the first drug of any class to be shown to be effective for patients with CTEPH,” said Norman Stockbridge, director of the Division of Cardiovascular and Renal Drug Products in the FDA’s Center for Drug Evaluation and Research.

Adempas will carry a boxed warning alerting patients and healthcare professionals that the drug should not be used in pregnant women because it can harm the developing fetus. Female patients can receive the drug only through the Adempas REMS program. All female patients must be enrolled in the program, comply with pregnancy testing requirements and be counseled regarding the need for contraception. The REMS restricted distribution program also requires prescribers and pharmacies to be certified by enrolling in the program. 

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