Shoppers Drug Mart Corp. saw its third-quarter net profit slip as it took a $13-million restructuring charge linked to the rationalization of its central office functions.
The Toronto-based pharmacy operator's net income was $168-million, down from $172-million a year earlier, the company said Tuesday.
Adjusted net earnings per share, excluding the restructuring and other items, was 81 cents, up from 79 cents in the same year-earlier period and in line with analyst estimates.
Sales revenue increased 3.2 per cent to $3.2-billion and included a 2.3 per cent increase in same-store sales.
Shoppers said net earnings for the third quarter included the $13-million pretax restructuring charge along with an offsetting pretax gain on disposal of $13-million in respect of a sale-leaseback transaction involving certain retail properties.
Net earnings for the third quarter of the prior year included a pretax gain on disposal of $3-million in respect of a sale-lease back transaction.
"This is a strong performance in the context of a challenging economic and competitive environment," president and chief executive officer Domenic Pilla said.
"And while headwinds remain on the regulatory front, we are encouraged by the early success of our pharmacy growth initiatives, along with the steps we have taken to further reduce costs and promote efficiencies."
Shoppers said pharmacy sales were $1.54-billion in the quarter, an increase of 1.7 per cent compared with the same period last year.
That reflected strong growth in the number of prescriptions filled at retail, combined with continued sales gains in the company's MediSystem Technologies and Specialty Health Network businesses, partly offset by a further reduction in average prescription value.
The decrease in average prescription value was largely the result of further reductions in generic prescription reimbursement rates, the result of recently implemented and ongoing drug system reform initiatives in certain jurisdictions of Canada, along with increasing generic prescription utilization rates.
Over all, pharmacy sales accounted for 48 per cent of the company's sales mix compared with 48.7 per cent in the same quarter of last year as front store sales increase 4.6 per cent to $1.669-billion in the quarter.
Front store sales were led by strong growth in cosmetics, over-the-counter medications and food and confection.
Shoppers Drug Mart is the licensor of full-service retail drug stores operating under the name Shoppers Drug Mart – Pharmaprix in Quebec – with 1,237 locations across the country.
It also licenses or owns 57 medical clinic pharmacies operating under the name Shoppers Simply Pharmacy, six luxury beauty destinations operating as Murale and owns and operates 63 Shoppers Home Health Care stores, making it the largest Canadian retailer of home health-care products and services.
In addition to its retail store network, it owns Shoppers Drug Mart Specialty Health Network Inc., a provider of specialty drug distribution, pharmacy and comprehensive patient support services, and MediSystem Technologies Inc., a provider of pharmaceutical products and services to long-term care facilities.