The Jean Coutu Group (PJC) Inc. has reported a large drop in net income in its fiscal 2014 first quarter, mainly due to much smaller gains from the sale of shares in U.S. pharmacy chain Rite Aid compared with the year-earlier period.
The Quebec-based operator of franchised drug stores throughout Quebec and in Ontario and New Brunswick said net income in period ended June 1 was $108.6-million or 51 cents per share.
That was down from $397.3-million or $1.81 per share in the fiscal 2013 quarter when the company realized gains of $348-million from its Rite Aid holdings, versus $54.4-million in the most recent period.
Revenue was $681.6-million, almost unchanged from $681.5-million last year.
Net profit excluding gains related to the investment in Rite Aid were $54.2-million or 26 cents per share in the three months ended June 1.
That was up from $51.6-million or 24 cents in the prior-year period and matched analyst expectations for per share earnings, according to figures compiled by Thomson Reuters.
“We are satisfied with the results recorded in the first quarter,” president and CEO Francois Coutu said, adding that operating income showed “solid growth in spite of the deflationary impact of generic drugs on pharmacy sales.”
Quebec’s largest pharmacy retailer recently sold another 40.5 million common shares of U.S. chain Rite Aid or $110.8-million (U.S.) in net proceeds.
The company said it would record a gain of $50-million in the corporation’s net profit in the second quarter of fiscal 2014.
Once the largest shareholder of Rite Aid following the sale of 1,854 Brooks and Eckerd drugstores and distribution centres in 2007, Jean Coutu has reduced its holdings in the company to 7.2 per cent.
Meanwhile, Jean Coutu also said it plans to spend nearly $190-million (Canadian) to build a new, larger headquarters and distribution centre in Varennes, Que. Construction on the new headquarters is set to begin next year, with operations transferring over in 2016.
Desjardins Securities analyst Keith Howlett said the new distribution centre could help consolidate the Quebec pharmacy market.
There are three major franchise systems in Quebec – Jean Coutu, Pharmaprix, the Quebec division of Shoppers Drug Mart Corp., and Metro’s Brunet – as well as three major co-operatives – Uniprix, Familiprix and Proxim.
The Jean Coutu Group operates a network of 407 franchised stores in Quebec, New Brunswick and Ontario under the banners of PJC Jean Coutu, PJC Clinique, PJC Sante and PJC Sante Beaute.
It also owns Pro Doc Ltd, a Quebec-based subsidiary and manufacturer of generic drugs, along with an investment in Rite Aid Corp., which has more than 4,600 drugstores in 31 states and the District of Columbia.Report Typo/Error