Stock Name: SC
Amount: CAD 0.25
Announcement Date: 09/11/2011
Record Date: 28/12/2011
Dividend Detail:
TORONTO, Nov. 9, 2011 /CNW/ - Shoppers Drug Mart Corporation (TSX: SC)
today announced its financial results for the third quarter ended
October 8, 2011.
Third Quarter Results (16 Weeks)
Third quarter sales were $3.111 billion, an increase of 2.1% over the
same period last year, driven by sales growth in both prescriptions and
in the front of the store. On a same-store basis, total sales
increased 1.5% during the quarter.
Prescription sales were $1.514 billion in the third quarter, an increase
of 1.5% compared to the same period last year. Growth in the number of
prescriptions filled remained strong, however this volume growth
continues to be largely offset by a reduction in average prescription
value. On a same-store basis, prescription sales increased 1.1% during
the quarter. During the third quarter of 2011, total prescription
counts increased 3.6% compared to the same period last year and were up
3.4% on a same-store basis. The decrease in average prescription value
can be attributed to a reduction in generic prescription reimbursement
rates, the result of recently implemented and ongoing drug system
reform initiatives in certain jurisdictions of Canada, combined with
increasing generic prescription utilization rates. Generic molecules
represented 56.9% of prescriptions dispensed in the third quarter of
2011 compared to 54.8% of prescriptions dispensed in the same period
last year. In the third quarter of 2011, prescription sales accounted
for 48.7% of the Company's sales mix compared to 49.0% of the Company's
sales mix in the third quarter of last year.
Front store sales were $1.596 billion in the third quarter, an increase
of 2.6% compared to the same period last year, led by strength in
cosmetics, food and confection and other convenience categories. On a
same-store basis, front store sales increased 1.8% during the quarter.
Third quarter net earnings, inclusive of a gain on disposal of $3
million (pre-tax) in respect of a sale-leaseback transaction involving
certain of the Company's retail properties, were $172 million or 80
cents per share. Excluding the impact of this gain, adjusted net
earnings for the third quarter of 2011 were $170 million or 79 cents
per share, an increase of 5.0% compared to adjusted net earnings of
$162 million or 74 cents per share in the third quarter of 2010.
Adjusted net earnings for the prior year exclude the impact of a charge
of 3 cents per share to settle a long-standing legal dispute related to
a commercial arrangement with one of the Company's ancillary
businesses. Solid performance in the front of the store was partially
offset by continued downward pressure on sales and margin dollars in
the dispensary as a result of drug system reform initiatives
implemented in a number of provinces. These results also reflect the
benefits from cost reduction, productivity and efficiency initiatives
in comparable stores, which served to partially offset higher operating
expenses at store level associated with the Company's network growth
and expansion initiatives, principally occupancy, wages and benefits,
along with increased Associate earnings. Net earnings for the third
quarter of 2011 also benefitted from a reduction in the Company's
effective income tax rate.
Commenting on the results, Domenic Pilla, President and CEO stated, "We
are encouraged by the Company's performance in the third quarter and
results thus far in fiscal 2011. This remains a difficult period of
transition as we continue to work through government reform initiatives
in a number of provinces and the resultant funding and reimbursement
pressures this has placed on our pharmacy business. Together with our
Associate-owners and their teams at store level, we are confident that
our commitment to patient care and customer service, along with our
merchandising strategies and promotional campaigns, have us
well-positioned entering the final quarter of the year."
Year-to-date Results (40 weeks)
Sales for the first three quarters of 2011 were $7.852 billion, an
increase of 2.1% over the same period last year, with prescription
sales up 0.2% and front store sales up 3.9%. On a same-store basis,
year-to-date sales increased 1.4%, with prescription sales up 0.1% and
front store sales up 2.8%. During the first three quarters of 2011,
prescription counts increased 3.8% on both a total and a same-store
basis when compared to the same period last year. Generic molecules
represented 56.3% of prescriptions dispensed in the first three
quarters of 2011 compared to 53.3% of prescriptions dispensed in the
same period last year. Prescription sales accounted for 48.6% of the
Company's sales mix compared to 49.6% of the Company's sales mix in the
first three quarters of last year.
Net earnings for the first three quarters of 2011, inclusive of the
aforementioned third quarter gain on disposal of $3 million (pre-tax),
were $438 million or $2.02 per share. Excluding the impact of this
gain, adjusted net earnings for the first three quarters of 2011 were
$435 million or $2.01 per share, an increase of 3.3% compared to
adjusted net earnings of $422 million or $1.94 per share in the first
three quarters of 2010. In addition to excluding the impact of the
aforementioned legal settlement charge of 3 cents per share incurred in
the third quarter of 2010, adjusted net earnings for the first three
quarters of last year also exclude the impact of a first quarter gain
on disposal of 4 cents per share in respect of a sale-leaseback
transaction involving certain of the Company's retail properties.
Store Network Development
During the third quarter of 2011, 15 drug stores were opened including
three acquired outpatient hospital pharmacies and six relocations, and
one smaller drug store was closed. The Company also completed eight
major drug store expansions during the quarter. In addition to this
activity, 18 existing drug stores were remodeled, converting them to
smaller prototype formats. At quarter-end, there were 1,328 stores in
the system, comprised of 1,257 drug stores (1,198 Shoppers Drug
Mart/Pharmaprix stores and 59 Shoppers Simply Pharmacy/Pharmaprix
Simplement Sant stores), 63 Shoppers Home Health Care stores and eight
Murale stores. Retail selling space was approximately 13.2 million
square feet at the end of the third quarter of 2011, an increase of
4.3% compared to a year ago.
Dividend
The Company also announced today that its Board of Directors has
declared a dividend of 25 cents per common share, payable January 13,
2012 to shareholders of record as of the close of business on December
30, 2011.
Normal Course Issuer Bid Program
During the third quarter of 2011, the Company repurchased 2,691,400
common shares under its normal course issuer bid program at an
aggregate cost of $105 million, representing an average repurchase
price of $38.92 per common share. All repurchased shares were
subsequently cancelled.
Other Information
The Company will hold an analyst call at 3:30 p.m. (Eastern Standard
Time) today to discuss its third quarter results. The call may be
accessed by dialing 416-695-7806 from within the Toronto area, or
1-888-789-9572 outside of Toronto. The seven-digit participant pass
code number is 1610464. The call will also be simulcast on the
Company's website for all interested parties. The webcast can be
accessed via the Investor Relations section of the Shoppers Drug Mart
website at www.shoppersdrugmart.ca. The conference call will be archived in the Investor Relations
section of the Shoppers Drug Mart website until the Company's next
analyst call. A playback of the call will also be available by
telephone until 11:59 p.m. (Eastern Standard Time) on November 23,
2011. The call playback can be accessed after 5:00 p.m. (Eastern
Standard Time) on Wednesday, November 9, 2011 by dialing 905-694-9451
from within the Toronto area, or 1-800-408-3053 outside of Toronto.
The seven-digit pass code number is 8288634.
About Shoppers Drug Mart Corporation
Shoppers Drug Mart Corporation is one of the most recognized and trusted
names in Canadian retailing. The Company is the licensor of
full-service retail drug stores operating under the name Shoppers Drug
Mart (Pharmaprix in Qubec). With more than 1,198 Shoppers Drug Mart
and Pharmaprix stores operating in prime locations in each province and
two territories, the Company is one of the most convenient retailers in
Canada. The Company also licenses or owns 59 medical clinic pharmacies
operating under the name Shoppers Simply Pharmacy (Pharmaprix
Simplement Sant in Qubec) and eight luxury beauty destinations
operating as Murale. As well, the Company owns and operates 63
Shoppers Home Health Care stores, making it the largest Canadian
retailer of home health care products and services. In addition to its
retail store network, the Company owns Shoppers Drug Mart Specialty
Health Network Inc., a provider of specialty drug distribution,
pharmacy and comprehensive patient support services, and MediSystem
Technologies Inc., a provider of pharmaceutical products and services
to long-term care facilities in Ontario and Alberta.
For more information, visit www.shoppersdrugmart.ca.
Forward-looking Information and Statements
This news release, including the Management's Discussion and Analysis,
(collectively, the "News Release"), contains forward-looking
information and statements which constitute "forward-looking
information" under Canadian securities law and which may be material,
regarding, among other things, the Company's beliefs, plans,
objectives, estimates, intentions and expectations. Forward-looking
information and statements are typically identified by words such as
"anticipate", "believe", "expect", "estimate", "forecast", "goal",
"intend", "plan", "will", "may", "should", "could" and similar
expressions. Specific forward-looking information in this News Release
includes, but is not limited to, statements with respect to the
Company's future operating and financial results, its capital
expenditure plans, its dividend and shareholder distribution policies
and the ability to execute on its future operating, investing and
financing strategies.
The forward-looking information and statements contained herein are
based on certain factors and assumptions, certain of which appear
proximate to the applicable forward-looking information and statements
contained herein. Inherent in the forward-looking information and
statements are known and unknown risks, uncertainties and other factors
beyond the Company's ability to control or predict, which give rise to
the possibility that the Company's predictions, forecasts, expectations
or conclusions will not prove to be accurate, that its assumptions may
not be correct and that the Company's plans, objectives and statements
will not be achieved. Actual results or developments may differ
materially from those contemplated by the forward-looking information
and statements.
The material risk factors that could cause actual results to differ
materially from the forward-looking information and statements
contained herein include, without limitation: the risk of adverse
changes to laws and regulations relating to prescription drugs and
their sale, including pharmacy reimbursement programs and the
availability of manufacturer allowances, or changes to such laws and
regulations that increase compliance costs; the risk that the Company
will be unable to implement successful strategies to manage the impact
of the drug system reform initiatives implemented or proposed in a
number of provinces; the risk of adverse changes in economic and
financial conditions in Canada and globally; the risk of increased
competition from other retailers; the risk of an inability of the
Company to manage growth and maintain its profitability; the risk of
exposure to fluctuations in interest rates; the risk of material
adverse changes in foreign currency exchange rates; the risk of an
inability to attract and retain pharmacists and key employees; the risk
of an inability of the Company's information technology systems to
support the requirements of the Company's business; the risk of changes
to estimated contributions of the Company in respect of its pension
plans or post-employment benefit plans which may adversely impact the
Company's financial performance; the risk of changes to the
relationships of the Company with third-party service providers; the
risk that the Company will not be able to lease or obtain suitable
store locations on economically favourable terms; the risk of adverse
changes to the Company's results of operations due to seasonal
fluctuations; risks associated with alternative arrangements for
sourcing generic drug products, including intellectual property and
product liability risks; the risk that new, or changes to current,
federal and provincial laws, rules and regulations, including
environmental and privacy laws, rules and regulations, may adversely
impact the Company's business and operations; the risk that violations
of law, breaches of Company policies or unethical behaviour may
adversely impact the Company's financial performance; property and
casualty risks; the risk of injuries at the workplace or health issues;
the risk that changes in tax law, or changes in the way that tax law is
expected to be interpreted, may adversely impact the Company's business
and operations; the risk that new, or changes to existing, accounting
pronouncements may adversely impact the Company; the risks associated
with the performance of the Associate-owned store network; the risk of
material adverse effects arising as a result of litigation; the risk of
damage to the reputation of brands promoted by the Company, or to the
reputation of any supplier or manufacturer of these brands; and the
risk that events or series of events may cause business interruptions.
This is not an exhaustive list of the factors that may affect any of the
Company's forward-looking information and statements. Investors and
others should carefully consider these and other factors and not place
undue reliance on the forward-looking information and statements.
Further information regarding these and other factors is included in
the Company's public filings with provincial securities regulatory
authorities including, without limitation, the sections entitled "Risks
and Risk Management" and "Risks Associated with Financial Instruments"
in the Company's Management's Discussion and Analysis for the 52 week
period ended January 1, 2011, for the 12 week period ended March 26,
2011 and for the 12 and 24 week periods ended June 18, 2011. The
forward-looking information and statements contained in this News
Release represent the Company's views only as of the date of this
release. Forward-looking information and statements contained in this
News Release about prospective results of operations, financial
position or cash flows that are based upon assumptions about future
economic conditions and courses of action are presented for the purpose
of assisting the Company's shareholders in understanding management's
current views regarding those future outcomes and may not be
appropriate for other purposes. While the Company anticipates that
subsequent events and developments may cause the Company's views to
change, the Company does not undertake to update any forward-looking
information and statements, except to the extent required by applicable
securities laws.
Additional information about the Company, including the Annual
Information Form, can be found at www.sedar.com.
Financial Information
To immediately view and download Shoppers Drug Mart Corporation's third
quarter of 2011 management's discussion and analysis and unaudited
condensed consolidated financial statements, please access the
following links:
Q3/2011 Management's Discussion and Analysis
Q3/2011 Unaudited Condensed Consolidated Financial Statements
This information can also be downloaded at www.sedar.com or by accessing the Investor Relations section of the Company's website
at www.shoppersdrugmart.ca.
PDF with caption: "Q3/2011 Management's Discussion and Analysis". PDF available at: http://stream1.newswire.ca/media/2011/11/09/20111109_C4033_DOC_EN_6333.pdf
PDF with caption: "Q3/2011 Unaudited Condensed Consolidated Financial Statements". PDF available at: http://stream1.newswire.ca/media/2011/11/09/20111109_C4033_DOC_EN_6334.pdf
For further information:
| Media Contact: | Investor Relations: |
| Tammy Smitham | (416) 493-1220, ext. 5678 |
| Director, Communications & Corporate Affairs | investorrelations@shoppersdrugmart.ca |
| (416) 490-2892, or | |
| corporateaffairs@shoppersdrugmart.ca | |
| (416) 493-1220, ext. 5500 | |
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