Stock Name: SC
Amount: CAD 0.265
Announcement Date: 19/07/2012
Record Date: 26/09/2012
Dividend Detail:
TORONTO, July 19, 2012 /CNW/ - Shoppers Drug Mart Corporation (TSX: SC)
today announced its financial results for the second quarter ended June
16, 2012.
Second Quarter Year-Over-Year Highlights
Sales increase of 2.6% to $2.457 billion
Same-store increase of 2.2%
Pharmacy sales increase of 1.5% to $1.172 billion
Same-store increase of 0.8%
Retail prescription count increase of 4.2%
Same-store increase of 3.8%
Front store sales increase of 3.6% to $1.285 billion
Same-store increase of 3.4%
Net earnings per share of $0.70, an increase of 2.9%
Adjusted net earnings per share of $0.71, an increase of 4.4%
Repurchased 2,303,300 common shares at an aggregate cost of $96 million
Year-to-Date Highlights
Sales increase of 2.3% to $4.851 billion
Same-store increase of 1.9%
Pharmacy sales increase of 1.5% to $2.340 billion
Same-store increase of 1.0%
Retail prescription count increase of 3.6%
Same-store increase of 3.2%
Front store sales increase of 3.1% to $2.511 billion
Same-store increase of 2.7%
Net earnings per share of $1.26, an increase of 3.3%
Adjusted net earnings per share of $1.28, an increase of 4.9%
Repurchased 4,123,000 common shares at an aggregate cost of $171 million
Second Quarter Results (12 Weeks)
Second quarter sales were $2.457 billion, an increase of 2.6% over the
same period last year, driven by modest sales growth in pharmacy and
strong results in the front of the store where the Company experienced
sales gains in all regions of the country.�� On a same-store basis,
sales increased 2.2% during the quarter.
Pharmacy sales were $1.172 billion in the second quarter, an increase of
1.5% compared to the same period last year, as solid growth in the
number of prescriptions filled at retail, combined with strong sales
growth in the Company's MediSystem Technologies and Specialty Health
Network businesses, continues to be partially offset by a reduction in
average prescription value.�� On a same-store basis, pharmacy sales
increased 0.8% during the quarter.�� During the second quarter of 2012,
the number of prescriptions dispensed at retail increased 4.2% compared
to the same period last year and was up 3.8% on a same-store basis.��
The decrease in average prescription value can be largely attributed to
further reductions 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
58.6% of prescriptions dispensed in the second quarter of 2012 compared
to 56.9% in the same period last year.�� In the second quarter of 2012,
prescription sales accounted for 47.7% of the Company's sales mix
compared to 48.2% in the same quarter of last year.
Front store sales were $1.285 billion in the second quarter, an increase
of 3.6% compared to the same period last year, led by strong growth in
cosmetics and in food and confection.�� The Company's store network
development program, which resulted in a 4.2% increase in drug store
selling space compared to a year ago, continues to have a positive
effect on sales growth, particularly in the front of the store.�� Front
store sales growth was also driven by effective marketing campaigns and
impactful promotions, along with solid program execution at store
level.�� On a same-store basis, front store sales increased 3.4% during
the quarter.
Second quarter net earnings, inclusive of a charge of $5 million
(pre-tax) from the closure of two Murale stores, were $146 million
compared to $148 million in the same period last year.�� On a fully
diluted basis, net earnings per share were 70 cents in the second
quarter of 2012 compared to 68 cents in the same period last year, an
increase of 2.9%.�� Excluding the impact of this charge, adjusted net
earnings for the second quarter of 2012 were $149 million or 71 cents
per fully diluted share, an increase of 4.4%.�� Strong sales growth,
combined with a disciplined approach to margin management, resulted in
a 3.4% increase in gross profit dollars compared to the second quarter
of last year.�� Operating and administrative expenses, including
depreciation and amortization expense, increased 5.7% compared to the
same period last year.�� Excluding the impact of the aforementioned
charge of $5 million from the closure of two Murale stores, adjusted
operating and administrative expenses were up 5.0% year-over-year,
driven largely by higher store-level expenses, primarily occupancy,
wages and benefits related to network growth and expansion initiatives,
along with increased Associate earnings.�� Other factors that positively
impacted net earnings for the second 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 second quarter of 2012, as
there were 3.7% fewer fully diluted weighted average shares outstanding
compared to the second quarter of last year.
Commenting on the quarter, Domenic Pilla, President and CEO stated, "We
are pleased with our second quarter operating and financial results.��
This performance speaks to the strength of our value proposition in
what remains a challenging economic environment.�� It is also a
testament to the quality of our people, including our Associate-owners
and their teams at store level, as they continue to execute on our
strategic priorities and initiatives in order to mitigate the impact of
regulatory reforms on our business."
First Half Results (24 Weeks)
First half sales were $4.851 billion, an increase of 2.3% over the same
period last year, with pharmacy sales up 1.5% and front store sales up
3.1%.�� On a same-store basis, first half sales increased 1.9%, with
pharmacy sales up 1.0% and front store sales up 2.7%.�� During the first
half of 2012, the number of prescriptions dispensed at retail increased
3.6% compared to the same period last year and was up 3.2% on a
same-store basis.�� Generic molecules represented 58.1% of prescriptions
dispensed in the first half of 2012 compared to 56.7% in the same
period last year.�� In the first half of 2012, prescription sales
accounted for 48.2% of the Company's sales mix compared to 48.6% in the
first half of last year.
First half net earnings, inclusive of the charge of $5 million (pre-tax)
from the closure of two Murale stores, were $265 million, essentially
flat to the comparative prior year period.�� On a fully-diluted basis,
net earnings per share were $1.26 in the first half of 2012 compared to
$1.22 in the same period last year.�� Excluding the impact of this
charge, adjusted net earnings for the first half of 2012 were $269
million or $1.28 per fully diluted share, an increase of 4.9%.
Store Network Development
During the second quarter, 15 drug stores were opened or acquired, seven
of which were relocations, and the Company completed two major drug
store expansions.�� In addition to this activity, three existing drug
stores were remodeled, converting them to smaller prototype formats,
and two Murale stores were closed.�� At quarter-end, there were 1,340
stores in the system, comprised of 1,271 drug stores (1,215 Shoppers
Drug Mart/Pharmaprix stores and 56 Shoppers Simply Pharmacy/Pharmaprix
Simplement Sant�� stores), 63 Shoppers Home Health Care stores and six
Murale stores.�� Retail selling space was approximately 13.5 million
square feet at the end of the second quarter of 2012, an increase of
4.0% 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 October 15,
2012 to shareholders of record as of the close of business on September
28, 2012.
Normal Course Issuer Bid Program
During the second quarter of 2012, the Company repurchased 2,303,300
common shares under its normal course issuer bid program at an
aggregate cost of $96 million, representing an average repurchase price
of $41.64 per common share.�� Year-to-date, the Company has repurchased
4,123,000 common shares under its normal course issuer bid program at
an aggregate cost of $171 million, representing an average repurchase
price of $41.43 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 second 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 August 2, 2012.��
The call playback can be accessed after 5:00 p.m. (Eastern Daylight
Time) on Thursday, July 19, 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 1102811.
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 1,215 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 56 medical clinic pharmacies
operating under the name Shoppers Simply Pharmacy (Pharmaprix
Simplement Sant�� in Qu��bec) and six 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 and for the 12 week period ended March
24, 2012.�� 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 second
quarter of 2012 management's discussion and analysis and unaudited
condensed consolidated financial statements, please access the
following links:
Q2/2012 Management's Discussion and Analysis
Q2/2012 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 Q2/2012 Management's Discussion and Analysis
accessible through the foregoing link contains references to non-GAAP
financial measures such as adjusted operating and administrative
expenses, operating margin, adjusted operating margin, EBITDA (earnings
before finance expenses, income taxes and depreciation and
amortization), adjusted EBITDA, EBITDA margin, adjusted EBITDA margin,
adjusted net earnings, adjusted net earnings per share and cash
interest expense.�� These non-GAAP financial measures do not have
standardized meanings prescribed by GAAP and, therefore, may not be
comparable to similarly titled measures presented by other reporting
issuers.
These non-GAAP financial measures have been included in the Q2/2012
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.
PDF available at: http://stream1.newswire.ca/media/2012/07/19/20120719_C9350_DOC_EN_16330.pdf
PDF available at: http://stream1.newswire.ca/media/2012/07/19/20120719_C9350_DOC_EN_16331.pdf
For further information:
Media Contact:
Tammy Smitham
Vice President, Communications & Corporate Affairs
(416) 490-2892
Investor Relations:
(416) 493-1220, ext. 5678
investorrelations@shoppersdrugmart.ca
