Postal union stages Day of Action

From the Timmins (Ont.) Daily Press:
The Canadian Union of Postal Workers held a day of action on Friday to express its dissatisfaction over services being mailed out to a popular drug store.

More and more of the work is getting shipped to Shoppers Drug Mart stores, said Donald Lafleur, national vice president of the union.

The gathering was held outside the Canada Post office in the heart of downtown, with a barbecue for those passing by.

"We're here to raise awareness about the government moving the public postal service into the private realm," Lafleur said.

"The concern we have is the services will deteriorate."

He said postal workers receive a level of training unmatched by staff in the drug stores, who he believes are underpaid and won't receive a pension or benefits. ...more

Shoppers Drug Mart Rises After Profit Beats Estimates

From Bloomberg:
Shoppers Drug Mart Corp., Canada's biggest drugstore chain, rose the most in six years in Toronto trading after second-quarter profit climbed more than analysts estimated on higher sales of medicine and store-brand products.

Net income increased 14 percent to C$128.3 million ($127.8 million), or 59 cents a share, for the 17th straight gain in quarterly profit. Revenue in the three months that ended June 14 rose 9.4 percent, Shoppers Drug Mart said today in a statement.

The chain boosted sales of generic drugs and introduced more profitable merchandise such as a new Nativa organic food line and higher-priced cosmetics. Chief Executive Officer Jurgen Schreiber, 46, added more store-brand lines to gain market share since taking the helm last year. ...more

Shoppers' move into specialty pharmacy market

From the Financial Post:
Shoppers Drug Mart Corp.'s decision to move into the specialty pharmacy market this week was well received by analysts.

The acquisition of Calea HealthAccess, which distributes and administers drugs to patients with complex medical conditions such as cancer and HIV, provides Shoppers with better knowledge of a fast-growing specialty pharmacy segment," Scotia Capital analyst Ryan Balgopal said in a note to clients. With growth rates in the mid-teens, entering the sector "is complementary to [Shoppers'] existing businesses and allows it to leverage its scale." Mr. Balgopal reiterated his rating of sector outperform on the shares and his one year price target of $67.50.

While the acquisition is not material from a financial reporting perspective, Shoppers' entry into the $3-billion a year specialty pharmacy business in Canada seems to follow a trend occurring among U.S. counterparts such as CVS and Walgreens, said Desjardins Securities analyst Keith Howlett. "Both drug retailers and wholesalers in the U.S. appear to want to move to a new business paradigm with higher margins, based upon services which make more healthcare more efficient for patients and players," he wrote in a note to clients. He reiterated his buy recommendation and his $60 price target on the shares. "In a sea of retailing despair, Shoppers is one of a select few that will grow earnings per share in the second quarter of 2008." ...more

Shoppers Drug Mart and Jean Coutu may feel the heat from U.S.

From the Financial Post:
He already had a “sell” rating on shares of Shoppers Drug Mart Corp., but a deal last week that appears to signal a U.S. health care player’s push up north gave Octagon Capital analyst Robert Gibson even more reason to be bearish on Canada’s largest pharmacy chain.

On June 19, health care logistics provider McKesson Canada, a division of San Francisco-based McKesson Corp., announced that it is buying Quebec-based Group PharmEssor Inc., which consists of 270 independently-owned pharmacies in Quebec, Ontario and the Atlantic provinces. The chain operates under the Proxim and ProxiMed brands. In the U.S., McKesson runs Health Mart, the number one independent retail pharmacy, Mr. Gibson noted.

“It would appear that this Proxim acquisition is McKesson’s move north with their Health Mart model,” he told clients.

The company’s vertical integration likely means the McKesson-Proxim combination will become a stronger competitor to major chains in Quebec and the Atlantic provinces, including Jean Coutu Group Inc., the analyst said. ...more

Shoppers Drug Mart seen as defensive buy

From the Financial Post:
Continued growth at Shoppers Drug Mart Corp. in the first quarter with no discernible impact from an economic slowdown has analysts pegging the drug retailer as a good defensive buy.

"If anything, they are seeing increased market share" in the face of a dwindling economy, said analyst Robert Gibson of Octagon Capital in a note to clients, raising his per share earnings estimates in fiscal 2009 to $2.72 from $2.67 and target price to $51.90. He maintained his hold recommendation.

Vishal Shreedhar at UBS Investment Research noted Shoppers "continues to perform in a moderating consumer environment" in a note to clients.

"We view Shoppers as a high-quality company with a defensive earnings stream. Margins continue to benefit from improved mix, increased private label, global sourcing, purchasing power and maturing real estate." ...more

Shoppers Drug profit up 19 pct on chain expansion

From Reuters:
Profit at Shoppers Drug Mart (SC.TO) rose about 19 percent in the first quarter, Canada's largest pharmacy chain said on Tuesday, helped by an aggressive expansion campaign, cost cuts and a tax reduction.

The company also announced a dividend of 21.5 Canadian cents per common share, payable in July.

Shoppers said it earned C$101.3 million ($100.1 million), or 47 Canadian cents a share, in the period ended March 22, up from C$85.3 million, or 39 Canadian cents a share, in the comparable period a year earlier.

Revenue in the quarter was up 10 percent at C$2.02 billion, continuing to climb as the company expands both the size and number of its stores. ...more

Shoppers Drug Net Rises 16% on Expansion; Shares Gain

From Bloomberg:
Shoppers Drug Mart Corp., Canada's biggest pharmacy chain, reported fourth-quarter profit that rose more than analysts estimated as it opened new stores.

Shoppers gained the most in almost five years in Toronto trading.

Net income climbed 16 percent to C$153.7 million ($152.7 million), or 71 cents a share, and revenue advanced 7.5 percent, Toronto-based Shoppers said today in a statement. The company forecast sales to rise as much as 12 percent this year, exceeding the average analyst projection.

The chain added 30 stores including some with convenience food and cosmetics to lure more customers. Shoppers boosted sales of its own Life products, which are about 10 percent more profitable than national brands. The company wants to increase purchases of its store brand to a quarter of total sales. ...more

Recruiting pharmacists called 'shameful'

From the Globe and Mail:
A small group of AIDS activists demonstrated outside a recruitment meeting held by Shoppers Drug Mart in Cape Town last night. The session, at a hotel in the upmarket neighbourhood of Camps Bay, was designed to inform South African pharmacists about opportunities working with Shoppers in Canada. ...more

Is Shoppers Drug Mart poaching pharmacists from South Africa?

From the Globe and Mail:
Michael and Berdine Fazakas liked what they heard: that in Canada, they could own a profitable business - really profitable. That there are fewer murders in most Canadian cities each year than there are in a week in Johannesburg, where they live now. Canada has good, free schools for their future kids and vast expanses of nature - "just lots of opportunity," Mr. Fazakas said.

That's what they took away from a meeting held here last week by Shoppers Drug Mart Corp. Canada's largest drugstore chain has a team in South Africa seeking pharmacists to hire and sponsor as immigrants to Canada. The company provides legal assistance and covers the costs associated with immigration for the pharmacists it hires here. There's another Shoppers' information session in Durban tonight and in Cape Town on Thursday.

This is the only developing country where Shoppers recruits, and it's one with a dire shortage of pharmacists: In KwaZulu-Natal province, for example, one in three adults has HIV but 75 per cent of jobs for public pharmacists are vacant.

So meetings like last week's dinner-drinks-and-information session (from which Shoppers' staff barred a Globe and Mail reporter) are controversial. ...more

Journal accuses Shoppers Drug Mart of poaching South African pharmacists

I find the concept of recruiting health professionals from other geographic areas a fascinating ethical question. Who is to say that a foreign pharmacist doesn't deserve the opportunity to build a new life in another country? Also, what about luring health professionals from rural areas of Canada to larger urban centres? What if Shoppers recruits the only pharmacist in a small town in northern Manitoba and leaves that town without pharmacy services?

I'm not sure why a physicians group has decided to take Shoppers Drug Mart to task on this. I'd like to hear the Canadian Medical Association's views on urban health regions recruiting in smaller Canadian towns that are already short of physicians.

The last line in the article is very interesting...

"If Shoppers Drug Mart fails to act before World AIDS Day on Dec. 1, CMAJ also believes governments, hospitals and all Canadians should show solidarity for South Africa, and take their business elsewhere."

Does this mean we will see a physician led boycott of Shoppers Drug Mart? Will physicians counsel their patients to not get their prescriptions there? Will they refuse to send new or refill prescription orders to Shoppers? As far as I'm aware, physicians are ethically obliged to not suggest one pharmacy over another to patients.

From the Canadian Press:
Human rights activist and former UN ambassador Stephen Lewis joined one of Canada's pre-eminent medical journals Tuesday in denouncing an iconic drugstore chain for aggressively recruiting South African pharmacists and potentially fuelling a public health disaster.

In an article to be published in its January edition, the Canadian Medical Association Journal takes Shoppers Drug Mart, Canada's largest drugstore chain, to task, accusing it of going after the very pharmacists South Africa desperately needs to dispense drugs to its own population.

For the last three years, Shoppers has dispatched recruiters to the southern African country with aim of luring pharmacists with the promise of a guaranteed $100,000 salary, the journal says.

"This behaviour is not just gauche; it is unethical," the article states. ...more

A hard act to follow

This article is a great recap of the battle between the big pharmacy chains in Canada. I also liked the analysis as to why Walgreens or CVS are probably not looking north in the near future.

From the Globe and Mail:
The mundane name aside, Store No. 1206 is not your typical pharmacy.

In fact, at first, second and third blush, the new Burlington, Ont., outlet of Shoppers Drug Mart looks like anything but a suburban drug mart. Right at the door there's the beauty section, lined with glass shelves of facial creams, makeup and a blue-glass jar of Guerlain cream at $435. Just beyond that is the sweet scent of Chanel No. 5 perfume ($126) and the smile of a cosmetician eager to assess your beauty challenges.

Then there's the more predictable line of Christmas decorations and a display of the chain's private label Le Chocolat, a premium line of imported Belgian chocolates selling this week for $16.99 a box. All that before one reaches the store's namesake - the almost forgotten drug counter at the back - and a route to the cash that passes today's most pressing consumer needs, from $3.99 milk to a $229 MP3 player.

For Shoppers Drug Mart Corp., this is all by design. The big drugstore chains have reinvented themselves - again - in order to dominate the middle ground between high-margin convenience stores and high-volume department stores. They have transformed into retail players, and are barely recognizable as the local pharmacies where your grandparents bought medicine and cod liver oil. Today, the big chains focus on cosmetics and private labels, whose gross profit margins are thought to be two or three times that of many prescription medications.

For François Jean Coutu, chief executive officer of Jean Coutu Group (PJC) Inc., it comes down to one word: destination. ...more

Private labels key to Shoppers

From the Globe and Mail:
Shoppers Drug Mart Corp. will add more than 200 private label organic foods to its shelves early next year, as well as more premium cosmetics, as the chain bolsters its position as a neighbourhood mini-department store.

The company is expanding into higher margin non-prescription categories in its bid to take on large competitors such as discounter Wal-Mart Canada Corp. and grocer Loblaw Cos. Ltd., which have moved more aggressively into the territory of pharmacies.

Jurgen Schreiber, chief executive officer at Shoppers, said yesterday that private labels, such as Life, now make up about 15 per cent of its overall sales and "next year we will definitely increase that again." He has set a long-term goal of more than doubling that level. ...more

Shoppers Drug Mart's profits jump

From the Toronto Star:
Shoppers Drug Mart Corp. (TSX: SC), the country's largest drug store operator, said Tuesday that further forays into organic foods, beauty brands and a stepped up focus on private label brands are on the horizon next year after a strong third quarter.

"We had a very good Q3 and will look forward to a very strong Q4, too, and we look forward to a very strong Q1 next year," Shoppers president and CEO Jurgen Schreiber said during a conference call.

Strong growth across Canada led by gains in Western Canada and Quebec helped Shoppers increase its third quarter profits and sales, the company reported Tuesday.

The Toronto company said third quarter profits rose 15.1 per cent to $143 million from $124 million the previous year on a sales jump of more than nine per cent. ...more

Shoppers Drug Mart buys seven-store pharmacy chain in Quebec City

From Canada East:
Shoppers Drug Mart Corp. (TSX:SC) is increasing its presence in the Quebec City area.

A subsidiary of Shoppers has bought the assets of Centre d'Escomptes Racine, a long established pharmacy chain, Canada's biggest drug store operator announced Tuesday.

No financial terms were revealed for the sale of the seven-store chain to Pharmaprix Inc., Shoppers' wholly owned Quebec-based unit, according to a release.

The acquisition of the stores boosts Pharmaprix's outlets to nine from two in the area. ...more

Shoppers Drug Mart Profit Climbs 19% on Expansion

From Bloomberg:
Shoppers Drug Mart Corp., Canada's biggest pharmacy chain by sales, said second-quarter profit rose 19 percent on new stores that sell higher-priced beauty brands.

Net income increased to C$112.3 million ($107.7 million), or 52 cents a share, from C$94.4 million, or 44 cents, a year earlier, Toronto-based Shoppers said today in a statement. Sales in the period through June 16 climbed 9 percent to C$1.93 billion. Earnings beat analysts' estimates by 2 cents.

Shoppers opened 21 locations in the quarter, increasing retail space by 11.4 percent from a year earlier. The company has expanded space and added brand-name cosmetics at its in-store beauty boutiques to attract shoppers from department stores. ...more

Pricing pinches drugstores

From the Globe and Mail:
Uncertainty lingers about whether generic drug pricing changes in Ontario will hurt Shoppers Drug Mart Corp., but already some rivals are feeling the pain.

Loblaw Cos. Ltd., which has a wide network of pharmacies in its supermarkets, has reported a $10-million hit to its first-quarter operating profit because of the legislative reforms, which lower the price the province pays for generic drugs. Other pharmacies in Ontario are being pinched.

"It has hurt pharmacy tremendously," says Neil Bornstein, owner of a drugstore in Toronto that is part of Langley, B.C.-based Pharmasave Drugs (National) Ltd. "The waters are more muddied than ever ... I can't understand how Loblaw can identify it as a significant hurt and Shoppers not." ...more

Shoppers has competitive advantage in Ontario: Analyst

From the Financial Post:
Analyst Keith Howlett of Desjardins Securities has reconsidered his position on Shoppers Drug Mart Corp., (SC/TSX) saying the retailer might have a competitive advantage over others despite recent changes to drug policy in Ontario.

The analyst has upgraded his rating on the stock to "hold" from "sell" with an unchanged target of $50.

“Given recent share price weakness, management’s steadfast confidence in the outlook for the business and our possible identification of the company’s competitive advantage in dealing with drug policy changes in Ontario, we are upgrading our rating,” Mr. Howlett wrote in a note to clients. ...more

Shoppers boss unfazed by drug laws

From the Globe and Mail:
The new chief executive officer at Shoppers Drug Mart Corp., who must contend with new drug laws, insists that an aging and more health-conscious population creates huge business opportunities for everything from prescriptions to organic foods and premium skin-care products.

Jurgen Schreiber, at his first Shoppers annual meeting, dismissed "rumours" that new generic drug pricing laws, which came into full effect on April 1 and reduce the amount Ontario will pay for generics, could put a damper on Shoppers' stellar financial performance. ...more

Shoppers Drug Mart profit jumps almost 19 percent

From Reuters:
Shoppers Drug Mart (SC.TO) reported an 18.7 percent jump in first-quarter profit on Monday, as Canada's largest drugstore chain continued to enjoy robust prescription and front-store sales.

Shoppers said it earned C$85.1 million ($76.6 million), or 39 Canadian cents a share, for the quarter ended March 24, up from a profit of C$71.7 million, or 33 Canadian cents a share, in the corresponding period a year earlier.

Solid top-line growth, an enhanced sales mix and an ongoing commitment to cost reduction helped power profit higher in the quarter, the company said, noting those factors offset higher operating costs and increased amortization in new and relocated stores. ...more

Shoppers ramps up premium cosmetics offerings

From the Globe and Mail:
Shoppers Drug Mart Corp. is expanding its coveted high-end Estée Lauder Inc. cosmetics line, yet another blow to department stores that have depended on those sales to draw customers.

The move comes less than a month after Jurgen Schreiber, a former beauty and health retail executive in Europe, took over the chief executive officer job at Shoppers.

Mr. Schreiber "is having a positive impact on Shoppers Drug Mart's relationships with major prestige cosmetic brand owners," Keith Howlett, retail analyst at Desjardins Securities, wrote in a research note yesterday. ...more