Jean Coutu’s solid Q3 retail performance hampered by Pro Doc, Metro acquisition
Jean Coutu Group on Thursday shared its fiscal 2018 third-quarter results showing an uptick in retail performance even as the company’s generics manufacturer Pro Doc and its ongoing acquisition of Canadian grocer Metro brought down its operating income.
Retail sales from the Quebecois company’s network of 419 franchised stores — which include the PJC Jean Coutu, PJC Jean Coutu Santé and PJC Jean Coutu Santé Beauté — were $1.13 billion Canadian for the period ended Dec. 2, 2017 — up from the $1.09 billion Canadian in retail sales the company saw in Q3 2017. Total-store and same-store pharmacy sales both increased 4% — a slower rate than the year ago period. For the front end, total sales increased 2.5% and same-store sales grew 2.3%. In both pharmacy and front-end total- and same-store sales grew at a slower rate than in the previous period.
Year-to-date, though, the company is tracking ahead of where it was last year, with same-store sales up 4.7% in fiscal 2018 — more than the 2.6% growth it saw at this point in fiscal 2017. Same-store pharmacy sales have grown 6.2% so far year-to-date — more than three times the 1.9% growth posted at the same time last year. During the quarter, the company opened 3 PJC network stores, which included 2 relocations. Two stores were significantly renovated and one closed.
“Network retail sales increased significantly in the third quarter of fiscal 2018, despite a challenging regulatory environment and a highly competitive environment,” Jean Coutu president and CEO François Coutu said. “This growth demonstrates the effective implementation of our business plan. We intend to pursue the development of dynamic business strategies to ensure the evolution of our offer and contribute to the growth of retail sales.”
Despite solid retail performance, the company’s operating income before amortization, or OIBA, decreased $13.5 million Canadian to $66.4 million Canadian— down from the $79.9 million Canadian in revenue the company saw in the prior-year Q3. The company attributed the decrease to a lower contribution from its Pro Doc generics manufacturing subsidiary, as well as $8.5 million Canadian in expenses related to its acquisition of Canadian grocer Metro.
Pro Doc’s decreased revenue was attributed partially to higher professional allowances before a ceiling was reinstated through an agreement between the Ministry of Health and Social Services and the Association québécoise des pharmaciens propriétaires, and partially to a $5.5 million non-recurrent expense related to inventory that was the result of an agreement between the Canadian Generic Pharmaceutical Association and the Quebec government.
With regard to its Metro acquisition, Jean Coutu said it expects the transaction — which will see it pay $4.5 billion Canadian for the grocer — to close in the first half of 2018.
Retail sales from the Quebecois company’s network of 419 franchised stores — which include the PJC Jean Coutu, PJC Jean Coutu Santé and PJC Jean Coutu Santé Beauté — were $1.13 billion Canadian for the period ended Dec. 2, 2017 — up from the $1.09 billion Canadian in retail sales the company saw in Q3 2017. Total-store and same-store pharmacy sales both increased 4% — a slower rate than the year ago period. For the front end, total sales increased 2.5% and same-store sales grew 2.3%. In both pharmacy and front-end total- and same-store sales grew at a slower rate than in the previous period.
Year-to-date, though, the company is tracking ahead of where it was last year, with same-store sales up 4.7% in fiscal 2018 — more than the 2.6% growth it saw at this point in fiscal 2017. Same-store pharmacy sales have grown 6.2% so far year-to-date — more than three times the 1.9% growth posted at the same time last year. During the quarter, the company opened 3 PJC network stores, which included 2 relocations. Two stores were significantly renovated and one closed.
“Network retail sales increased significantly in the third quarter of fiscal 2018, despite a challenging regulatory environment and a highly competitive environment,” Jean Coutu president and CEO François Coutu said. “This growth demonstrates the effective implementation of our business plan. We intend to pursue the development of dynamic business strategies to ensure the evolution of our offer and contribute to the growth of retail sales.”
Despite solid retail performance, the company’s operating income before amortization, or OIBA, decreased $13.5 million Canadian to $66.4 million Canadian— down from the $79.9 million Canadian in revenue the company saw in the prior-year Q3. The company attributed the decrease to a lower contribution from its Pro Doc generics manufacturing subsidiary, as well as $8.5 million Canadian in expenses related to its acquisition of Canadian grocer Metro.
Pro Doc’s decreased revenue was attributed partially to higher professional allowances before a ceiling was reinstated through an agreement between the Ministry of Health and Social Services and the Association québécoise des pharmaciens propriétaires, and partially to a $5.5 million non-recurrent expense related to inventory that was the result of an agreement between the Canadian Generic Pharmaceutical Association and the Quebec government.
With regard to its Metro acquisition, Jean Coutu said it expects the transaction — which will see it pay $4.5 billion Canadian for the grocer — to close in the first half of 2018.