Stock Name: SC
Amount: CAD 0.265
Announcement Date: 26/04/2012
Record Date: 27/06/2012
Dividend Detail:
CONTINUED GROWTH IN SALES AND EARNINGS PER SHARE
TORONTO, April 26, 2012 /CNW/ - Shoppers Drug Mart Corporation (TSX: SC)
today announced its financial results for the first quarter ended March
24, 2012.
First Quarter Year-Over-Year Highlights
Sales increase of 2.0% to $2.394 billion
Same-store increase of 1.5%
Pharmacy sales increase of 1.6% to $1.168 billion
Same-store increase of 1.1%
Retail prescription count increase of 2.9%
Same-store increase of 2.7%
Front store sales increase of 2.5% to $1.226 billion
Same-store increase of 2.0%
Net earnings per share of $0.56, an increase of 3.7%
Repurchased 1,819,700 common shares at an aggregate cost of $75 million
First Quarter Results (12 Weeks)
First quarter sales were $2.394 billion, an increase of 2.0% over the
same period last year, driven by modest sales growth in pharmacy and
stronger results in the front of the store.�� On a same-store basis,
sales increased 1.5% during the quarter.�� A calendar shift that
resulted in the inclusion of an additional statutory holiday (New Years
Day) in the first quarter of 2012, combined with a relatively weak cold
and flu season, served to moderate the rate of increase in
year-over-year sales growth.
Prescription sales were $1.168 billion in the first quarter, an increase
of 1.6% compared to the same period last year, as growth in the number
of prescriptions filled continues to be partially offset by a reduction
in average prescription value.�� On a same-store basis, prescription
sales increased 1.1% during the quarter.�� During the first quarter of
2012, the number of prescriptions dispensed at retail increased 2.9%
compared to the same period last year and was up 2.7% on a same-store
basis.�� Adjusting for the impact of the calendar shift noted above, it
is estimated that the number of prescriptions dispensed at retail would
have increased 3.5% year-over-year and would have been up 3.2% on a
same-store basis.�� The decrease in average prescription value can be
largely 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, along with
increasing generic prescription utilization rates.�� Generic molecules
represented 57.6% of prescriptions dispensed in the first quarter of
2012 compared to 56.6% of prescriptions dispensed in the same period
last year.�� In the first quarter of 2012, prescription sales accounted
for 48.8% of the Company's sales mix compared to 49.0% of the Company's
sales mix in the same quarter of last year.
Front store sales were $1.226 billion in the first quarter, an increase
of 2.5% compared to the same period last year, led by strong sales
gains in cosmetics and select convenience categories, notably food and
confection.�� The Company's store network development program, which
resulted in a 4.2% increase in selling space compared to a year ago,
was also a contributing factor to sales growth in the front of the
store.�� On a same-store basis, front store sales increased 2.0% during
the first quarter of 2012, a solid result considering the negative
impact of the calendar shift and seasonality factor noted above.
First quarter net earnings were $119 million compared to $118 million in
the same period last year.�� On a fully diluted basis, net earnings per
share were 56 cents in the first quarter of 2012 compared to 54 cents
per share in the same period last year, an increase of 3.7%.�� Strong
sales in the front of the store, combined with a disciplined approach
to managing pricing and promotional activities, served to offset
further downward pressure on sales and margins in the dispensary,
resulting in a 3.6% increase in gross profit dollars compared to the
first quarter of last year.�� Operating and administrative expenses,
inclusive of depreciation and amortization expense, increased 4.9%
compared to the same period last year, driven largely by higher
store-level expenses, primarily occupancy, wages and benefits related
to the Company's network growth and expansion initiatives, along with
increased Associate earnings.�� Other factors that contributed to growth
in net earnings for the first quarter of 2012 were lower finance
expenses and a reduction in the Company's effective income tax rate.��
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 net earnings per share during the first quarter of 2012, as
there were 2.6% fewer fully diluted shares outstanding compared to the
first quarter of last year.
Commenting on the quarter, Domenic Pilla, President and CEO stated, "We
are encouraged by our first quarter operating and financial results.��
This is a solid performance and a good start to the year in what
remains a challenging economic and regulatory environment.�� Together
with our Associate-owners and their teams at store-level, we continue
to work through the impact of regulatory reforms on our business, while
never compromising on our commitment to providing the best in patient
care and customer service."
Store Network Development
During the first quarter, 14 drug stores were opened or acquired, six of
which were relocations, and two smaller drug stores were closed.�� The
Company also completed three major drug store expansions during the
quarter.�� In addition to this activity, seven existing drug stores were
remodeled, converting them to smaller prototype formats.�� At
quarter-end, there were 1,334 stores in the system, comprised of 1,263
drug stores (1,206 Shoppers Drug Mart/Pharmaprix stores and 57 Shoppers
Simply Pharmacy/Pharmaprix Simplement Sant�� stores), 63 Shoppers Home
Health Care stores and eight Murale stores.�� Retail selling space was
approximately 13.4 million square feet at the end of the first quarter
of 2012, an increase of 4.2% compared to a year ago.
Dividend
The Company also announced today that its Board of Directors has
declared a dividend of 26.5 cents per common share, payable July 13,
2012 to shareholders of record as of the close of business on June 29,
2012.
Normal Course Issuer Bid Program
During the first quarter of 2012, the Company repurchased 1,819,700
common shares under its normal course issuer bid program at an
aggregate cost of $75 million, representing an average repurchase price
of $41.16 per common share.�� All repurchased shares were subsequently
cancelled.
Other Information
The Company will hold an analyst call at 3:00 p.m. (Eastern Daylight
Time) today to discuss its first 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 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 Daylight Time) on May 10, 2012.��
The call playback can be accessed after 5:00 p.m. (Eastern Daylight
Time) on Thursday, April 26, 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 Qu��bec).�� With 1,206 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 57 medical clinic pharmacies
operating under the name Shoppers Simply Pharmacy (Pharmaprix
Simplement Sant�� in Qu��bec) 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.
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 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 December 31, 2011.�� The forward-looking information and
statements contained in this News Release represent the Company's views
only as of the date hereof.�� 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 first
quarter of 2012 management's discussion and analysis and unaudited
condensed consolidated financial statements, please access the
following links:
Q1/2012 Management's Discussion and Analysis
Q1/2012 Unaudited Condensed Consolidated Financial Statements
This information will also be available at www.sedar.com or by accessing the Investor Relations section of the Company's website
at www.shoppersdrugmart.ca.
The Company reports its financial results in accordance with Canadian
GAAP.�� However, the Q1/2012 Management's Discussion and Analysis
accessible through the foregoing link contains references to non-GAAP
financial measures, such as operating margin, EBITDA (earnings before
finance expenses, income taxes and depreciation and amortization),
EBITDA margin and cash interest expense.�� Non-GAAP financial measures
do not have standardized meanings prescribed by GAAP and, therefore,
may not be comparable to other reporting issuers.
These non-GAAP financial measures have been included in the Q1/2012
Management's Discussion and Analysis as they are measures which
management uses to assist in evaluating the Company's operating
performance against its expectations and against other companies in the
retail drug store industry.�� Management believes that non-GAAP
financial measures assist in identifying underlying operating trends.
These non-GAAP financial measures, particularly EBITDA and EBITDA
margin, are also common measures used by investors, financial analysts
and rating agencies. These groups may use EBITDA, EBITDA margin and
other non-GAAP financial measures to value the Company and assess the
Company's ability to service its debt.
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
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