Shoppers to ramp up store growth in face of up 3Q

Drug Store News, Nov 22, 2004 by Michael Johnsen

TORONTO -- Shoppers Drug Mart is planning to accelerate its new-store growth rate in 2005, the chain's Chairman and Chief Executive Officer Glenn Murphy told analysts. "We're looking at a greater than 10 percent increase in square footage in '04," Murphy said, "and current indications for '05 are that we will be able to be at least at that level if not slightly higher."

While the chain is still tweaking its now 2-year-old new-store prototype, "We will get a longer, sustainable trajectory of growth as [the new models] mature--greater than our comp growth," Murphy said. On an annualized basis, drug store sales per square foot totaled $839 at the end of the third quarter ended Oct. 9, compared with $758 a year ago.

Shoppers Drug Mart also is looking to reinforce its strong position in health and beauty. "The introduction of the beauty boutique was a big change for us in taking our cosmetics [business] to the next level," Murphy said. The chain also has increased the amount of floor space dedicated to natural health products, Murphy said.

While front-end comparable sales increased 5.1 percent for the chain's third quarter, Shoppers Drug Mart's same-store prescription sales increased 8.8 percent.

The chain reported net earnings of U.S.$76.8 million, or 43 Canadian cents per share, for the third quarter ended Oct. 9, an increase of 21.2 percent. Earnings fell one Canadian penny shy of analysts expectations, according to a poll from Reuters Estimates.

Total sales increased 9.1 percent to $1.6 billion, with a same-store sales growth of 6.9 percent for the quarter.