(Reuters) - Shoppers Drug Mart Corp SC.TO, Canada’s largest pharmacy chain, said on Thursday quarterly earnings edged higher after excluding a charge for store closures, as solid sales growth outweighed higher operating costs.
The company took a C$5 million pre-tax charge as it closed two of the eight stores under its Murale banner. The stores, launched in 2008, sell makeup, perfume and skin care products.
Total sales rose 2.6 percent to C$2.46 billion ($2.43 billion) while sales at established stores, a key measure for retailers, rose 2.2 percent.
Front-of-store sales, which include over-the-counter medication, cosmetics and food, rose 3.4 percent, pharmacy sales were 0.8 percent higher.
In recent quarters, sales and prescription margins at Shoppers and its competitors, including Jean Coutu Group Inc PJCa.TO, have been hurt by legislation passed in Ontario, Quebec and other provinces to lower the cost of generic prescriptions.
Operating costs rose 5.0 percent excluding the Murale charge, in part because of labor costs and other expenses related to “network growth and expansion initiatives.”
For the quarter ended June 16 net income slipped to C$146 million, or 70 Canadian cents a share, from C$148 million, or 68 Canadian cents, a year earlier.
Excluding the Murale charge, adjusted net earnings edged up to C$149 million, or 71 Canadian cents a share.
Analysts, on average, had expected earnings of 70 Canadian cents a share on revenue of C$2.46 billion, according to Thomson Reuters I/B/E/S.
($1 = $1.01 Canadian)
Reporting by Allison Martell in Toronto and Ankur Banerjee in Bangalore; Editing by Frank McGurty