Gains at front end drive Shoppers Drug Mart Q4 results

Shoppers Drug Mart posted an increase in fourth quarter sales driven by gains at the front end and strength in prescription count growth.



Sales for the quarter were Canadian $2.75 billion, an increase of 0.9% compared with the year-ago period. Same-store sales increased 1.2% during the quarter.



Pharmacy sales were C$1.23 billion in the fourth quarter, an increase of 0.8% compared with the same period of the prior year, as strong growth in the number of prescriptions filled at retail was partially offset by a further reduction in average prescription value, the company stated. On a same-store basis, pharmacy sales increased 0.5%.



During the fourth quarter of 2013, the number of prescriptions dispensed at retail increased 5% compared with the same period of the prior year and was up 4.7% on a same-store basis. Pharmacy volume growth was evident in all regions of the country and remains particularly strong in Ontario, the company noted.



Year-over-year, average prescription value at retail declined a further 3.8% during the fourth quarter of 2013, largely the result of further reductions in generic prescription reimbursement rates because of ongoing drug system reform initiatives in all provincial jurisdictions, along with increasing generic prescription utilization rates.



Front store sales were C$1.517 billion in the fourth quarter, an increase of 1.1% compared with the year-ago period, led by strong growth in cosmetics and food and confection. This is a particularly strong result relative to the marketplace and given that sales of OTC medications declined year-over-year in the absence of a strong cough and cold season compared with the fourth quarter of last year, the company stated. On a same-store basis, front store sales increased 1.7%.



Net earnings, inclusive of transaction-related costs of C$3 million associated with the pending acquisition of the company by Loblaw, were C$169 million in the quarter. Excluding the impact of these costs, adjusted net earnings for the fourth quarter of 2013 were C$172 million compared with net earnings of C$175 million in the same period of the prior year. On a diluted basis, adjusted net earnings per share were 86 Canadian cents in the fourth quarter of 2013 compared with net earnings per share of 85 Canadian cents in the same period of the prior year, an increase of 1.2%.



"We are pleased with our fourth quarter and full year operating and financial results. By any measure, our performance in the fourth quarter of 2013 is a successful conclusion to what has been a very successful year for our company and its shareholders. In what remains a highly competitive and challenging marketplace, it is clear that our value proposition and unwavering commitment to provide the best in patient-care and customer service continues to resonate with patients and customers alike," Domenic Pilla, president and CEO said. "On behalf of our shareholders and the board of directors, I would like to thank our corporate and regional office employees, along with our associates and their teams at store level, for their efforts and contributions to our collective success in 2013."



"While the transaction must still be reviewed and approved by the Competition Bureau, we look forward to the conclusion of this process and the resultant combination of Canada's leading food and pharmacy retailers," said Pilla, commenting on the pending acquisition of the company by Loblaw.



Fiscal 2013 sales for the 52 weeks totaled C$11.06 billion compared with C$10.78 billion in 2012, an increase of 2.6%. On a same-store basis, sales increased 1.9% in 2013.



Pharmacy sales were C$5.23 billion in 2013 compared with C$5.10 billion in 2012, an increase of 2.5%, as strong growth in the number of prescriptions filled at retail, combined with further sales gains in the company's MediSystem Technologies business, were partially offset by a further decline in average prescription value. On a same-store basis, pharmacy sales increased 1.3% during the year.



Front store sales were C$5.831 billion in 2013 compared with C$5.681 billion in 2012, an increase of $150 million or 2.6%, with the company posting sales gains in all categories, led by strong growth in cosmetics, OTC medications and food and confection. On a same-store basis, front store sales increased 2.5% in 2013.



Net earnings in 2013 were C$602 million compared with C$606 million in 2012. On a diluted basis, adjusted net earnings per share were C$3.05 in 2013 compared with C$2.97 in 2012, an increase of 2.7%.