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Jean Coutu posts 4.3 percent quarterly increase

BY Michael Johnsen

LONGUEUIL, Quebec The Jean Coutu Group on Tuesday reported revenue of $541.6 million (in U.S. dollars) for the 13 weeks ending March 1, an increase of 4.3 percent. Net earnings for the period amounted to a loss of $263.9 million

Jean Coutu recorded a loss of $325.1 million as part of its share of Rite Aid’s results. Jean Coutu owns a greater-than 30 percent stake in Rite Aid.

“Pharmacy sales showed robust growth while front-end sales were affected by a milder flu season, which impacted sales of non-prescription drugs,” stated Francois Coutu, president and chief executive officer at Jean Coutu. “Rite Aid made good progress on the integration of its acquired Brooks/Eckerd drug store network and these stores showed improving trends.”

During the third quarter, Jean Coutu’s Canadian franchise network retail sales were up 4.1 percent—pharmacy sales gained 7.3 percent and front-end sales declined 1.2 percent year-over-year in terms of comparable stores. “drop in hba”, Coutu said.

“Sales of non-prescription drugs represent 25 percent of our front-end sales, and like other North American drug store retailers, [Jean Coutu] has been impacted by substantial declines in the sales of cough/cold and flu medications due to a milder season this year,” Coutu told analysts. “Even though OTC sales were up during the third quarter, growth was down by 880 basis points year-over-year, accelerating the decline in OTC sales from the second quarter, when these sales were down 550 basis points year-over-year,” he said. “Sales growth was negative in our second-largest front-end category, health and beauty, due to price deflation in response to the appreciation and the value of the Canadian dollar as well as the price war amongst food stores and mass merchants that has affected overall market pricing.”

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Duane Reade announces total sales increase for Q1

BY Antoinette Alexander

NEW YORK Duane Reade announced on Tuesday that it narrowed its first quarter net loss as total sales rose 3.1 percent to $427.1 million as new chairman and chief executive John Lederer expressed optimism in Duane Reade’s potential.

Filling the top spot vacated by Rick Dreiling in late January, Lederer, from 2001 to 2006, served as president of the Canadian supermarket chain with more than 1,000 corporate and franchise stores under various operating banners. During his 30-year career at Loblaw and its subsidiary companies, Lederer has held a number of senior positions throughout the organization, including executive vice president responsible for merchandising, operations and profit performance of all Loblaw businesses in eastern Canada.

In a conference call with analysts to discuss its first quarter results, Lederer said he has spent his time absorbing and learning more about the company by visiting stores to talk with customers and employees.

He said the changes that have taken place within the Duane Reade under the direction of Dreiling are tangible and sustainable and there is a strong foundation on which to build.

That is not to say that challenges do not exist. Lederer told analysts that the business has and will continue to evolve and the shifts in management undoubtedly add some uncertainty. In addition, the company may face such headwinds as the macro economic conditions creating challenges for many retailers. However, he stressed that business will continue as usual so the stride will not be broken. Lederer said he wants the transition to be seamless and wants to maximize Duane Reade’s potential.

Looking ahead, the company will develop additional initiatives to elevate the brand and the business but Lederer did not discuss details.

Total sales rose 3.1 percent to $427.1 million from $414.4 million in the year-ago period. Same-store sales rose 4.5 percent, while front-end same-store sales rose 7 percent. Pharmacy same-store sales increased 1.5 percent.

Front-end sales, which benefited from the earlier timing of the East holiday by 0.5 percent, were driven by strong sales of food and beverage categories, OTC products, and health and beauty care items.

Net loss for the quarter totaled $21 million compared with $30.5 million in the prior year. The operating loss was $4.1 million compared with $14.9 million in the year-ago period.

For 2008, the company reaffirmed its guidance of adjusted FIFO EBITDA in the range of $90 million to $95 million driven by net retail store sales, excluding pharmacy resale activity, in the range of $1.72 billion to $1.736 billion. Total same-store sales are expected to grow between 3.3 percent to 4.3 percent.

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Proffer leaves Longs

BY Doug Desjardins

WALNUT CREEK, Calif. Longs Drug Stores director of investor relations Phyllis Proffer left the company earlier this month, a company spokesman confirmed.

No reason was given for Proffer’s departure and Longs is currently looking for someone to fill the position. Proffer had been with Longs since August 2003 when she joined as director of investor relations and public relations.

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