Jean Coutu ready to expand reach

Drug Store News,  August 18, 2003  by Molly Prior

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LONGUEUIL, Quebec -- Fresh off its 10th consecutive year of record earnings, the Jean Coutu Group has earmarked fiscal 2003-2004 for a flurry of activity across its entire retail network. "Our organization is stronger and more efficient than ever. We have everything we need to increase our presence in the North American market," stated president and chief executive officer Francois Coutu.

In Canada, pharmacy comps for the three-month period of April to June increased 10.4 percent, while front-end sales rose 4.5 percent. During a fourth-quarter and year-end conference call with analysts, Coutu said poor weather dampened sales of seasonal goods, but robust sales of health and beauty aids offset softness in general merchandise.

Coutu expects the chain's new loyalty program, Air Miles, will continue to reap rewards in the current fiscal year.

According to Coutu, the average Air Mile basket is 51.3 percent higher than the non-Air Mile basket, and the program accounts for 21.5 percent of all transactions. Since Jean Coutu began the program in May, the retailer has signed on 112,000 members to the program.

In the United States, the same three-month snapshot saw Brooks Pharmacy prescription drug comps rise 4.5 percent due to the impact of generics and front-end sales increase 5.6 percent. Brooks Pharmacy president and chief executive officer Michel Coutu said candy performed exceptionally well and in a surprise hit, a damp spring fueled record sales of self-tanning lotion, which as an added bonus, has a higher price tag than suntan lotion.

Fiscal 2003-2004 plans for the regional U.S. chain include merchandise updates to 40 former Osco stores, an initiative that kicked off May 1 and will continue through Sept. 15. Brooks also recently purchased eight stores for future development and plans to add 10 to 15 new stores.

As part of its increased focus on beauty, Brooks will continue to migrate its customers to higher-end personal care products. To that end, Brooks recently opened its fifth Derma Skincare Center, stocked with European skin care brands, and expects to roll out a total of five by end of fiscal 2003-2004.

On the Canadian front, Jean Coutu plans to open six to 10 pharmacies this fiscal year, mostly across Quebec. And many stores in the 300-store chain are slated to undergo a major overhaul in the next 12 months.

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