Shoppers Drug Mart (TSE:SC) beat expectations with low single-digit growth in the third quarter in what should be one of its last quarterly statements as a public entity, as it gets set to join what will be a Canadian-made retail heavyweight.
Shoppers, purchased in a $12.4 billion transaction by Brampton, Ont.-based Loblaw Cos. (TSE:L), said its net earnings in the three-month period ending Oct. 5 rose to $166 million compared to $168 million in the same quarter last year. On a per share basis, earnings increased 2.5% to 83 cents, two cents higher than a year ago.
Stripping out one-time items, including a $14 million transaction-related charge, Shopper's adjusted profit came to 88 cents a share, seven cents above the mean analyst estimate.
Modest growth in both pharmacy and front-of-store sales pushed Shopper's overall revenue 2.4% higher to $3.3 billion. Same-store sales grew 2.2%, as pharmacy-related comparable sales increased 1.8% on a higher number of prescriptions filled. Front-store same-store sales edged up 2.4% on a bigger average basket size and higher customer traffic.
The average value of each perscription declined 2.7% as a result of system reform-related reductions in generic prescription reimbursement rates. Shoppers said generics accounted for 62% of drug sales in the third quarter, compared to 60% in the same prior-year period. Pharmacy sales accounted for 48% of total sales, flat over last year.
Shareholders approved the Loblaw deal at a special meeting on Sept. 12 and four days later the court also gave its consent. Now, the only roadblock is a decision by the Competition Bureau. Loblaw said it plans to operate Shoppers as a separate division.
Shares gained 0.2 on Tuesday Morning. They have risen about 42% on the year.