* Sees "several impacts" of generic pricing in second
* Sees 2013 pharmacy same-store at the lower end of prior
* Revenue rises 4 percent in the first quarter
* Same-store sales up 2.5 pct in the period
By Krithika Krishnamurthy
April 25 Shoppers Drug Mart Corp,
Canada's biggest pharmacy chain, said tightened pricing controls
for generic drugs will push its 2013 pharmacy same-store sales
outlook to the lower end of its previous guidance.
The company had previously forecast pharmacy same-store
sales growth of between 1.5 percent to 2.5 percent for 2013.
Canada's provinces and territories agreed in January to
tighten caps on prices of six widely prescribed generic drugs to
cut costs for private and government health programs.
Saskatchewan Premier Brad Wall then told Reuters that more
could be done to cut the cost of generics, among the highest in
The new rules mandate drugstores charge no more than 18
percent of the price of the brand-name equivalent, lower than
the previous 25 percent to 40 percent cap. The rules kicked off
on April 1.
On a post-earnings conference call, Chief Executive Domenic
Pilla said "there will be several impacts" of this new rule in
the second quarter.
Price controls have crimped growth at Shoppers and rivals
such as Jean Coutu Group Inc in recent years.
Average prescription value fell 4.8 percent in the first
quarter ended March 23.
However, total sales in the quarter rose 4 percent to C$2.49
billion mostly on higher over-the-counter medications, food and
cosmetics. The cough and cold season in the first half of the
quarter also helped drive OTC sales.
Total same-store sales, or sales at stores open for at least
a year, rose 2.5 percent. Same-store sales increased 3.3 percent
at the front of the store and 1.6 percent at pharmacies.
Shoppers' net profit at C$119 million ($117 million), or 59
Canadian cents per share, was in line with analysts' estimates,
according to Thomson Reuters I/B/E/S.
"In the context of the current environment and the low
confidence around the earnings visibility, an in-line quarter
was actually a beat for Shoppers," said analyst Kenric Tyghe of
The company has also been expanding stores and opening new
ones to boost sales.
Shoppers, which also operates the Murale luxury spas, opened
seven stores and acquired four in the quarter, taking total
number of stores to 1,368.
"The team is actively engaged through all parts of the
country, with a focus on Ontario and Western Canada, with
regards to acquisition opportunities, " Chief Financial Officer
Bradley Lukow said on the call.
The company has allotted about 70 percent of its 2013
capital expenditure of about C$275 million to expanding its
Shares of the company closed up 15 Canadian cents at C$44.85
on Thursday on the Toronto Stock Exchange. It hit a two-year
high of C$45.44 earlier in the day.