UPDATE 1-Shoppers Drug Mart sales rise, profit tops views

Thu Feb 7, 2013 10:14am EST
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* Q4 EPS C$0.85 vs C$0.82 year earlier

* Earnings top analyst estimates

* Sales rise 4.4 percent to C$2.72 billion

* Same-store sales up 2.7 percent

* Shares rise 1.7 pct on Toronto Stock Exchange

TORONTO, Feb 7 (Reuters) - Shoppers Drug Mart Corp, Canada's leading pharmacy chain, reported a solid fourth-quarter sales increase on Thursday and profit that slightly exceeded expectations, sending its shares higher.

Sales at established stores, an important measure for retailers, rose 2.7 percent in the fourth quarter ended Dec. 29. Pharmacy sales rose 3.7 percent to C$1.22 billion as the chain filled more prescriptions, though pharmacy margins fell and overall profit was little changed from the year-earlier quarter.

Margins on prescription drugs took a hit from a regulatory drive across Canada to cut the cost of generic drugs. Higher operating costs, which the company said were related to growth initiatives, also held back earnings.

Growth at Shoppers and at rivals like Quebec's Jean Coutu Group Inc has been held back in recent years by the generic drug initiatives, and more pressure is on the horizon in Canada, where generic prices are among the highest in the world.   Continued...