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Jean Coutu’s solid Q3 retail performance hampered by Pro Doc, Metro acquisition

BY DSN STAFF

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.
 

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Sam’s Club’s Turner-Mitchael to retire

BY David Salazar

Sam’s Club senior vice president and GMM of consumable and health and wellness will be retiring at the end of the fiscal year, a Sam’s Club spokesperson confirmed Wednesday. Turner-Mitchael is a 26-year veteran of the company, having joined Walmart in 1992 as a pharmacist in Lubbock, Texas.

During her time at the company, Turner-Mitchael has led various teams at Walmart and Sam’s Club, including Walmart’s pharmacy operations team and Sam’s Club’s merchandising, operations and health and wellness divisions. She has received the Sam M. Walton Blue Coat Award of Excellence.

“Jill leaves a lasting legacy, both as a merchant and as a disruptor in the health care industry,” the company said. “Her passion in raising awareness of health and wellness issues and in testing exciting new concepts in clubs such as free screenings, health kiosks and caregiver support programs has helped the company to become a leader in affordable health care. Jill has also made a strong impact on associates throughout the company with her mentorship and focus on championing women’s advancement in the workplace.”

The company said it has not yet named Turner-Mitchael’s successor and will do so once it has been announced internally.

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Supervalu’s Q3 shows results of acquisitions on wholesale business

BY David Salazar

Grocery retailer and wholesaler Supervalu has shared the results from its fiscal 2018 third-quarter, which included a boon to its wholesale business in the form of its Unified Grocers acquisition, even as retail sales declined. The Minneapolis-based company’s total continuing operations saw net sales of $3.94 billion — up 31% from $3 billion in the same period last year.

Supervalu’s retail division netted $1.02 billion in sales, down 4.1% from last year’s $1.06 billion, which the company attributed to a 3.5% dip in same-store sales and store closings, offset by new and acquired store sales. The company’s retail operating loss was $6 million for the quarter, a number that included $3 million in costs related to store closures. Supervalu’s third-quarter operating loss was well below the loss it posted in the same period last year, when it reported $14 million.

The impact of retail losses on Supervalu’s bottom line was buoyed somewhat by its wholesale division’s performance. The wholesale business posted $2.89 billion in net sales, an increase of 52% over the prior period, which the company said was driven by the Unified Grocers acquisition, as well as new customer sales and increased sales to existing customers. Operating earnings were down slightly from last year, coming in at $48 million after being adjusted for $2 million of merger and integration costs. In the prior third quarter, Supervalu’s wholesale division brought in $52 million in operating earnings.

“With the influx of significant new business in certain distribution centers, we experienced a larger-than-anticipated increase in expenses, but we're encouraged by the work we are doing to address those costs and believe they are manageable going forward,” Supervalu president and CEO Mark Gross said. “We remain committed to investing in our wholesale business to drive future growth.”

On the corporate side, Supervalu saw fees earned of $33 billion from services agreements, and its new corporate operating loss was $1 million — which included $3 million of merger and integration cost. This is compared with net corporate operating earnings of $4 million last year.

With the Unified Grocers acquisition completed in Q3, the company set its sights on its Associated Grocers acquisition, closing it early in its fourth quarter.

“We're pleased to have completed our acquisition of AG Florida early in the fourth quarter,” Gross said. “The work done in the third quarter concluded with this deal which, combined with the acquisition of Unified Grocers earlier this fiscal year, demonstrates our commitment to the strategic growth of our Wholesale business. Furthermore, we're extremely pleased with the integration work at Unified and the progress made in that market.”

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