* Q1 adj EPS C$0.24 vs C$0.22 year earlier
* C$82.8 million gain on sale of Rite Aid shares
* Sales, same-store sales rise
July 10 Canadian pharmacy chain Jean Coutu Group
Inc reported a jump in quarterly earnings on Tuesday,
helped by the sale of part of its stake in U.S. drugstore chain
Rite Aid Corp and by higher sales.
Sales and margins at Longueuil, Quebec-based Jean Coutu and
competitors such as Shoppers Drug Mart Corp have been
hurt in the past few years by legislation in several Canadian
provinces, including Ontario and Quebec, that has reduced the
prices they can charge for generic drugs.
But in Jean Coutu's fiscal first quarter, ended June 2,
sales at established stores, a key measure for retailers, rose
"Our network retail sales, in particular those (in) the
pharmaceutical section, posted a significant increase despite
the price reductions of generic drugs," said Chief Executive
Francois Coutu on a conference call.
The latest wave of generic drug price cuts took effect in
early April, but Jean Coutu said they had less impact than
Jean Coutu is Rite Aid's biggest shareholder, the legacy of
the Canadian company's 2004 purchase of the Brooks and Eckerd
drugstore chain. In 2007, Jean Coutu sold the U.S. business to
Rite Aid for cash and stock. In April, it sold 56 million shares
of its 234.4 million share stake in Rite Aid.
The company recorded a gain of C$82.8 million on the sale
of Rite Aid shares and an unrealized gain of C$265.2 million on
that investment that followed from an accounting change.
Jan Coutu's quarterly net profit rose to C$397.4 million
($389.7 million), or C$1.81 a share, from C$49.9 million, or 22
Canadian cents, a year earlier.
On an adjusted basis, the company reported a profit of
C$51.7 million, or 24 Canadian cents a share. That was in line
with analysts' expectations of 24 Canadian cents, according to
Thomson Reuters I/B/E/S.
Revenue for Jean Coutu, which operates about 400 franchised
stores in Quebec, New Brunswick and Ontario, rose 3.2 percent to
Generic drugs accounted for 58.8 percent of drug
prescriptions sold during the quarter, compared with 56.5
percent a year earlier.
Sales at Jean Coutu's generic drug manufacturing subsidiary
Pro Doc rose to C$37.8 million, from C$35.9 million.
Shares were little changed shortly after the open on
Tuesday, trading up 0.1 percent at C$14.76 on the Toronto Stock