TORONTO - Shoppers Drug Mart (TSX:SC) says its first-quarter earnings were up eight per cent from a year ago, driven by top line growth and a continued emphasis on cost reduction.
But the results were slightly below analysts' expectations and the company's stock was down 63 cents or 1.69 per cent at $36.61 in early afternoon trading on the Toronto Stock Exchange.
Canada's largest drugstore chain says it earned $116 million, or 53 cents per diluted share, up from $107 million, or 49 cents per share a year ago.
Sales grew to $2.3 billion from $2.2 billion last year, as the company benefited from sales growth in all regions, led by Quebec and Western Canada. Same-store sales, an important indicator of real growth, increased 3.1 per cent in the quarter.
Analysts surveyed by Thompson-Reuters had expected first-quarter earnings of $118 million or 54 cents per share on revenue of $2.3 billion.
The company, which also declared a dividend of 22.5 cents per share, said profits were partially offset by higher store-level operating expenses associated with expansion initiatives and continued investments in pricing and promotional activities.
Shoppers opened 27 drug stores in the quarter, 11 of which were relocations, and closed one smaller drug store. It owns 1,303 stores.
Jurgen Schreiber, Shoppers president and CEO, said the company is pleased with the first-quarter results, especially since the cough, cold and flu season was weaker compared with a year ago.
"In these challenging times for community pharmacy, particularly in the province of Ontario, I am extremely proud of our associate-owners and their teams as they work through this difficult period without ever losing sight of what matters most -- the health and well-being of our valued patients and customers," he said in a statement issued Wednesday.
The Toronto-based retailer has warned its revenues will be inevitably eroded in future if the Ontario legislature passes a bill to reduce generic drug prices through the elimination of payments paid to drug stores by generic drug makers.
Prescription sales increased 6.3 per cent in the first quarter to $1.16 billion, accounting for 49.8 per cent of the company's sales mix. Same-store prescription sales increased 4.1 per cent.
The company says prescription sales growth continues to be driven primarily by strong growth in the number of prescriptions filled, while the increased use of generic medicine continues to have a deflationary impact on sales.
In the first quarter, generic drugs made up 54.2 per cent of dispensed prescriptions, compared with 52.8 per cent in the comparable period last year.
Meanwhile, front-end sales of merchandise, cosmetics and other products increased 5.1 per cent in the first quarter to $1.17 billion, with the company reporting sales gains in core categories. On a same-store basis, front store sales increased 2.1 per cent.