Shoppers Drug Mart profit dips on takeover costs
Shoppers Drug Mart Corp. saw its third-quarter profit dip compared with a year ago as it was hit by costs related to a friendly takeover of the company by Loblaw Co.
Under the $12.4-billion deal announced in July, Shoppers will become a subsidiary of Canada's largest grocery company and its shareholders will get a combination of cash and Loblaw stock.
Shoppers earned $165.8 million or 83 cents per share for the quarter ended Oct. 5. That compared with a profit of $167.7 million or 81 cents per share a year ago when it had more shares outstanding.
Excluding unusual items in both years, Shoppers would have earned 88 cents per share in the third quarter of 2013, up from 85 cents per share a year ago.
The average analyst estimate had been for a profit of 81 cents per share, based on those compiled by Thomson Reuters.
Sales totalled $3.29 billion, up from $3.21 million in the third quarter last year, while same-store sales were up 2.2 per cent.
Shoppers Drugs' pharmacy sales were up 2.7 per cent from a year earlier to $1.582 billion while front-of-store sales were up 2.2 per cent to $1.705 billion.
Shoppers said unspecified transaction costs from the sale to Loblaw reduced its net profit. During the third quarter of 2013, the company also repurchased 475,000 common shares under its normal course issuer bid program at an aggregate cost of $22.6 million
Shoppers president and chief executive Domenic Pilla said the Loblaw deal will change the retail landscape in Canada.
"And while this transaction must still be reviewed and approved by the Competition Bureau, we are excited by the prospects of new growth opportunities, enhancing our product and service offering and meeting the challenges facing our collective teams," Pilla said in a statement.
During the quarter, Shoppers opened six new drug stores, one of which was a relocation, and completed five major store expansions.
The company also closed three outpatient hospital pharmacies.
Shoppers had 1,301 drug stores, 62 Shoppers Home Health Care stores and six Murale stores at the end of the quarter.
Shares in the company were up 13 cents at $60.85 in trading on the Toronto Stock Exchange on Tuesday.