Shoppers says underwhelming cold season, winter storms hit fourth-quarter profit
TORONTO - Fewer colds and nasty winter storms left Shoppers Drug Mart Corp. (TSX:SC) with lower profits in the fourth quarter.
The pharmacy chain said Thursday it was forced to close 112 locations for as long as two days in late December when severe winter weather slammed Central Canada, causing massive power outages.
The fallout contributed to lower profits of $169.4 million, or 85 cents per share, for the quarter ended Dec. 28. That compared with profits of $175 million, or 85 cents per share, in the same period a year ago.
Also factoring into the results were $3 million of expenses from the pending a takeover by Loblaw (TSX:L) valued at $12.4-billion.
Excluding those costs, Shoppers said it earned $172 million or 86 cents per share, falling in line with analyst expectations, according to Thomson Reuters.
Revenue totalled $2.75 billion, up from $2.72 billion a year earlier, while its same-store sales were up 1.2 per cent.
"By any measure, our performance in the fourth quarter of 2013 was a successful conclusion to what was a very successful year," president and CEO Domenic Pilla told analysts during a conference call.
"However, (it) remains a very competitive and challenging marketplace."
Shoppers and other retailers have faced increased competition as Target Corp. rolls out its Canadian expansion â€” one of the factors underlying Loblaw's expansion in the pharmacy sector.
Consumers expect lower prices as they look to the number of alternatives in the retail market.
"Our percentage of sales on promotion products continues to increase as a percentage of total sales," Pilla said.
Pharmacy sales, which have been pressured by a lower value of prescriptions, increased 0.5 per cent on a same-store basis.
Non-prescription sales, referred to as front store sales, were up 1.1 per cent.
However, Pilla said the early cough and cold season fell short of last year, which meant fewer people bought over-the-counter remedies.
The Loblaw takeover of Shoppers Drug Mart still requires approval from the Competition Bureau, expected early this year.
Shoppers shares closed three cents higher at $58.07 Thursday on the Toronto Stock Exchange.
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