Stock Name: SC
Amount: CAD 1.06
Announcement Date: 09/02/2012
Record Date: 28/03/2012
Dividend Detail:
-ANNUAL DIVIDEND INCREASED BY 6.0% TO $1.06 PER SHARE
-RENEWAL OF SHARE REPURCHASE PROGRAM
TORONTO, Feb. 9, 2012 /CNW/ - Shoppers Drug Mart Corporation (TSX: SC)
today announced its unaudited financial results for the fourth quarter
and fiscal year ended December 31, 2011.
Fourth Quarter Year-Over-Year Highlights
Sales increase of 4.3% to $2.607 billion
Same-store increase of 3.4%
Pharmacy sales increase of 2.8% to $1.177 billion
Same-store increase of 2.3%
Prescription count increase of 3.9%
Same-store increase of 3.8%
Front store sales increase of 5.5% to $1.430 billion
Same-store increase of 4.4%
Net earnings per share of $0.82, an increase of 5.1%
Fiscal 2011 Highlights
Sales increase of 2.6% to $10.459 billion
Same-store increase of 1.9%
Pharmacy sales increase of 0.8% to $4.997 billion
Same-store increase of 0.6%
Prescription count increase of 3.8%
Same-store increase of 3.8%
Front store sales increase of 4.4% to $5.462 billion
Same-store increase of 3.2%
Net earnings per share of $2.84, an increase of 4.4%
Declared four quarterly dividends of 25 cents per common share
Repurchased 5,202,100 common shares at an aggregate cost of $212 million
Fourth Quarter Results (12 Weeks)
Fourth quarter sales were $2.607 billion, an increase of 4.3% over the
same period last year, driven by moderate sales growth in pharmacy and
strong results in the front of the store. The Company continued to
experience sales growth in all regions of the country, led by gains in
Western Canada. On a same-store basis, sales increased 3.4% during the
quarter.
Prescription sales were $1.177 billion in the fourth quarter, an
increase of 2.8% compared to the same period last year. Growth in the
number of prescriptions filled remained strong, however volume growth
continues to be offset somewhat by a reduction in average prescription
value. On a same-store basis, prescription sales increased 2.3% during
the quarter. During the fourth quarter of 2011, total prescription
counts increased 3.9% compared to the same period last year and were up
3.8% 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 57.1% of prescriptions dispensed in the fourth quarter of
2011 compared to 55.7% of prescriptions dispensed in the same period
last year. In the fourth quarter of 2011, prescription sales accounted
for 45.2% of the Company's sales mix compared to 45.8% of the Company's
sales mix in the same quarter of last year.
Front store sales were $1.430 billion in the fourth quarter, an increase
of 5.5% compared to the same period last year, with the Company
experiencing particularly strong sales gains in the beauty, confection
and convenient food categories. The Company's store network
development program, which has resulted in a 3.8% increase in selling
space compared to a year ago, continues to have a positive impact on
sales growth, particularly in the front of the store. Front store
sales growth was also aided by effective marketing campaigns and
impactful promotions, strong seasonal programs and solid execution at
store-level. On a same-store basis, front store sales increased 4.4%
during the fourth quarter of 2011.
Fourth quarter net earnings were $176 million compared to net earnings
of $169 million in the fourth quarter of 2010, an increase of 4.2%. On
a fully diluted basis, net earnings per share were 82 cents in the
fourth quarter of 2011 compared to 78 cents per share in the same
period last year, an increase of 5.1%. Net earnings for the fourth
quarter of 2010 included a $7 million (pre-tax) impairment charge under
IFRS related to certain of the Company's store assets. Excluding the
impact of this charge, the Company's adjusted net earnings for the
fourth quarter of 2010 were $175 million or 80 cents per fully diluted
share. Strong performance in the front of the store was partially
offset by continued investments in pricing and promotional activities,
and by further downward pressure on sales and margins 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 continued network growth and expansion
initiatives, and increased Associate earnings. Net earnings for the
fourth quarter of 2011 also benefitted from a reduction in the
Company's effective income tax rate, partially offset by an increase in
financing expenses. In addition to the earnings factors noted above,
the cumulative impact of the Company's share repurchase program had a
positive impact on growth in earnings per share as there were 1.5%
fewer fully diluted shares outstanding in the fourth quarter of 2011
compared to the same period last year.
Commenting on the results, Domenic Pilla, President and CEO stated, "We
are pleased with our fourth quarter and full year results for fiscal
2011. Considering the many challenges that we faced as a Company this
past year, I am encouraged by our operating and financial performance.
Looking ahead, the strength of our brand, the quality of our assets and
the power of our value proposition, together with the dedication and
commitment of our Associate-owners and their teams at store level, have
us well-positioned to confront the challenges and capitalize on the
opportunities in the rapidly evolving pharmacy marketplace. 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, for their efforts and contributions to our collective
success this past year."
Fiscal 2011 Results (52 Weeks)
Sales in 2011 were $10.459 billion compared to $10.193 billion in 2010,
an increase of $266 million or 2.6%. Sales increased in all regions of
the country, with the Company experiencing moderate sales growth in
pharmacy and strong results in the front of the store. The Company's
capital investment and store development program, which resulted in a
year-over-year increase in selling space of 3.8%, continues to have a
positive impact on sales growth. On a same-store basis, sales
increased 1.9% in 2011.
Prescription sales were $4.997 billion in 2011 compared to $4.959
billion in 2010, an increase of $38 million or 0.8%, as strong growth
in the number of prescriptions filled was largely offset by a further
decline in average prescription value. On a same-store basis,
prescription sales increased 0.6% during the year. During 2011,
prescription counts increased 3.8% on both a total and a same-store
basis over the prior year. A reduction in generic prescription
reimbursement rates, the result of recently implemented and ongoing
drug system reform initiatives in a number of provinces, combined with
greater generic prescription utilization rates, had a negative impact
on sales dollar growth in pharmacy. Generic molecules represented
56.9% of prescriptions dispensed in 2011 compared to 54.5% of
prescriptions dispensed in the prior year. In 2011, prescription sales
accounted for 47.8% of the Company's sales mix compared to 48.7% in the
prior year.
Front store sales were $5.462 billion in 2011 compared to $5.234 billion
in 2010, an increase of $228 million or 4.4%, with the Company posting
sales gains in all core categories, led by cosmetics, food and
confection, and other convenience categories. On a same-store basis,
front store sales increased 3.2% in 2011. In addition to square
footage growth, further investments in marketing, pricing and
promotional activities throughout the year drove sales and market share
gains in the front of the store.
Net earnings in 2011 were $614 million compared to $592 million in 2010,
an increase of $22 million or 3.7%. On a fully diluted basis, net
earnings per share were $2.84 in 2011 compared to $2.72 in 2010, an
increase of 4.4%. Net earnings for 2011 are inclusive of a third
quarter gain on disposal of $3 million (pre-tax) in respect of a
sale-leaseback transaction involving certain of the Company's retail
properties. Excluding the impact of this gain, adjusted net earnings
for 2011 were $611 million or $2.82 per share compared to adjusted net
earnings of $596 million or $2.74 per share in 2010. In addition to
excluding the impact of the aforementioned fourth quarter asset
impairment charge under IFRS of $7 million (pre-tax), adjusted net
earnings for 2010 also exclude the impact of a third quarter legal
settlement charge of $10 million (pre-tax), and a first quarter gain on
disposal of $12 million (pre-tax) in respect of a sale-leaseback
transaction. During 2011, strong performance in the front of the
store, which was supported by increased investments in pricing and
promotional activities, was partially offset by additional downward
pressure on sales and margins in the dispensary as a result of drug
system reform initiatives implemented in a number of provinces. These
results also reflect the benefits from improved purchasing synergies,
along with 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, and increased Associate earnings. Net
earnings growth in 2011 also benefitted from a reduction in the
Company's effective income tax rate, partially offset by an increase in
financing expenses. In addition to the earnings factors noted above,
the cumulative impact of the Company's share repurchase program had a
modestly positive impact on growth in earnings per share as there were
0.5% fewer fully diluted shares outstanding in 2011 compared to 2010.
Store Network Development
During the fourth quarter, 10 drug stores were opened or acquired, seven
of which were relocations, and three smaller drug stores were closed.
The Company also completed six major drug store expansions during the
quarter. In addition to this activity, eight existing drug stores were
remodeled, converting them to smaller prototype formats. For the
fiscal year ended December 31, 2011, the Company opened or acquired 56
drug stores, 32 of which were relocations, consolidated or closed eight
smaller drug stores, completed 25 major drug store expansions and
converted 49 existing drug stores to smaller prototype formats. At the
end of 2011, there were 1,328 stores in the system, comprised of 1,257
drug stores (1,199 Shoppers Drug Mart/Pharmaprix stores and 58 Shoppers
Simply Pharmacy/Pharmaprix Simplement Sant stores), 63 Shoppers Home
Health Care stores and eight Murale stores. During 2011, the selling
square footage of the retail store network increased by 3.8%, to in
excess of 13.2 million square feet at year end.
Dividend
The Company also announced today that its Board of Directors has
declared a dividend of 26.5 cents per common share, payable April 13,
2012 to shareholders of record as of the close of business on March 30,
2012. This represents an increase in the Company's quarterly dividend
payments of 6.0%, resulting in an annualized dividend of $1.06 per
common share.
Normal Course Issuer Bid Program
During the fourth quarter of 2011, the Company repurchased 2,510,700
common shares under its normal course issuer bid program at an
aggregate cost of $107 million, representing an average repurchase
price of $42.50 per common share. All repurchased shares were
subsequently cancelled. The Company's current normal course issuer bid
program will terminate on February 14, 2012.
The Company also announced today that its Board of Directors has
approved the renewal of its normal course issuer bid program and has
authorized the purchase of up to 10,600,000 of its common shares,
representing approximately 5.0% of the 212,359,697 common shares
currently outstanding, by way of normal course purchases effected
through the facilities of the Toronto Stock Exchange (the "TSX").
Under its current normal course issuer bid program that expires
February 14, 2012, the Company has repurchased 5,202,100 common shares
at an aggregate cost of $212 million, representing an average
repurchase price of $40.65 per common share. All repurchased shares
were subsequently cancelled. Subject to approval of the TSX, it is
anticipated that purchases under the new program may commence on
February 15, 2012 and will terminate on February 14, 2013, or on such
earlier date as the Company may complete its purchases pursuant to a
Notice of Intention to be filed with the TSX. Purchases will be made
by the Company in accordance with the requirements of the TSX and the
price which the Company will pay for any such common shares will be the
market price of any such common shares at the time of acquisition, or
such other price as may be permitted by the TSX. In connection with
the normal course issuer bid program, the Company intends to enter into
an automatic purchase plan with its designated broker to allow for
purchases of its common shares during certain pre-determined black-out
periods, subject to certain parameters as to price and number of
shares. Outside of these pre-determined black-out periods, shares will
be repurchased in accordance with management's discretion, subject to
applicable law. For purposes of the TSX rules, a maximum of 178,466
common shares may be purchased by the Company on any one day under the
bid, except where purchases are made in accordance with the "block
purchase exception" of the TSX rules. Common shares purchased by the
Company will be cancelled.
Commenting on the dividend increase and the renewal of the share
repurchase program, Brad Lukow, Executive Vice President and Chief
Financial Officer stated, "The Company remains committed to investing
free cash flow in opportunities that will generate attractive rates of
return. At the same time, the Company expects that it will have cash
or debt capacity in excess of its operating, financing and investment
requirements. The Board's decision to increase the dividend and renew
the share repurchase program reinforces the Company's commitment to
return excess cash to shareholders in order to enhance long-term
shareholder value. It also speaks to the strength of our financial
position and our confidence in the future, and is evidence of our
disciplined approach to capital management."
Fiscal 2012 Outlook (52 Weeks Ending December 29, 2012)
The Company expects total sales to increase by between 2.5% and 3.0% in
2012. This expectation is underpinned by anticipated same-store sales
growth of between 0.5% and 1.5% in pharmacy and 2.0% to 2.5% in the
front of the store. In pharmacy, it is expected that prescription
count growth will remain strong at approximately 4.0%, however this
growth will be largely offset by a continued reduction in average
prescription value. The decline in average prescription value is
mostly attributable to further reductions in generic prescription
reimbursement rates as a result of recently implemented or announced
drug system reform initiatives in a number of provinces. It is
anticipated that increasing generic prescription utilization rates will
also serve as a contributing factor to the decline in average
prescription value. Furthermore, funding from transitional fees in
certain provinces that was introduced to partially offset the impact of
various drug system reform initiatives will be reduced or phased-out in
2012, while the introduction of additional paid services for community
pharmacy have, for the most part, been slow to develop. In the front
of the store, it is the Company's expectation that sustained
investments in pricing and promotional activities will be required
throughout the year in order to generate the anticipated rate of sales
growth.
In fiscal 2012, the Company plans to allocate approximately $350 million
to its capital expenditure program, with approximately 75% of this
amount to be invested in the store network. This should result in an
increase in retail selling square footage of approximately 3.5%. This
will be accomplished through the addition of between 40 and 45 new drug
stores, approximately 20 of which will be relocations, and through the
completion of up to 15 major drug store expansions. The Company also
plans to remodel between 25 and 30 existing drug stores, converting
these stores to smaller prototype formats consistent with the brand
identification, product offering and consumer proposition offered by
the Company's large-format drug stores.
2011 Annual Report
The Company's audited consolidated financial statements and the notes
thereto for the year ended December 31, 2011 will be available on or
before March 30, 2012. Management's Discussion and Analysis for the
year ended December 31, 2011, including further discussion and analysis
of fourth quarter events or items that affected results of operations,
financial position and cash flows, will also be available on or before
March 30, 2012. Both documents will be contained in the Company's 2011
Annual Report and will be available in the Investor Relations section
of the Company's website at www.shoppersdrugmart.ca, or on the Canadian Securities Administrators' website at www.sedar.com.
Other Information
The Company will hold an analyst call at 3:00 p.m. (Eastern Standard
Time) today to discuss its fourth quarter results and its outlook for
fiscal 2012. 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 8845571. 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 February 23,
2012. The call playback can be accessed after 5:00 p.m. (Eastern
Standard Time) on Thursday, February 9, 2012 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 7754215.
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 almost 1,200 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 58 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 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, 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 or
effectively manage succession planning; 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; the risk of an inability of
the Company to respond to changing consumer preferences that may result
in excess inventory, inventory levels that are insufficient to meet
demand or inventory obsolescence; 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; product
quality and product safety risks which could expose the Company to
product liability claims and negative publicity; the risk that events
or a series of events may cause business interruptions; and the risk of
disruptions to the Company's distribution operations or supply chain
which could affect the cost, timely delivery and availability of
merchandise.
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, for the 12 and 24 week periods ended June 18, 2011 and for the 16
and 40 week periods ended October 8, 2011. The forward-looking
information and statements contained in this news release represent the
Company's views only as of the date of this news 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 fourth
quarter of 2011 unaudited condensed consolidated financial statements,
please access the following link:
Q4/11 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: "Q4/11 Unaudited Condensed Consolidated Financial Statements". PDF available at: http://stream1.newswire.ca/media/2012/02/09/20120209_C2791_DOC_EN_9919.pdf
For further information:
Media Contact:
Tammy Smitham
Director, Communications & Corporate Affairs
(416) 490-2892, or
corporateaffairs@shoppersdrugmart.ca
(416) 493-1220, ext. 5500
Investor Relations:
(416) 493-1220, ext. 5678
investorrelations@shoppersdrugmart.ca
No comments:
Post a Comment