April 28, 2009 / 5:15 PM / in 9 years

UPDATE 2-Shoppers Drug Mart profit rises on prescriptions

* EPS C$0.49 vs C$0.46

* Revenue rises 8.5 pct to C$2.2 billion

* Same store sales rise 2.1 percent

* Shares rise 2.7 percent to C$45.34 (Adds background and analyst comments)

By Scott Anderson

TORONTO, April 28 (Reuters) - Shoppers Drug Mart SC.TO, Canada’s biggest pharmacy chain, reported a higher quarterly profit on Tuesday as sales of prescription drugs and beauty care products rose.

Shoppers said it earned C$106.8 million ($87.5 million), or 49 Canadian cents a share, for the quarter ended March 28, up from C$100.7 million, or 46 Canadian cents a share, for the same period last year, which included the high-sales Easter weekend. The Easter holiday weekend did not fall in the first quarter this year.

Revenue rose 8.5 percent to C$2.2 billion, with same store sales rising 4 percent.

Analysts were expecting, on average, earnings per share of 48 Canadian cents before items and revenue of C$2.16 billion.

The company’s shares, which have fallen 11.4 percent in the past year, were up 2.7 percent at C$45.34 on the Toronto Stock Exchange on Tuesday.

Shoppers said it had strong sales growth across the country, and made gains in all of its product categories except tobacco, which is being phased out of stores in Western Canada that still carry tobacco products. Same-store sales, excluding tobacco, rose 2.1 percent.

Prescription drug sales on a same-store basis rose 5.9 percent. Total prescription sales climbed 11.7 percent to C$1.09 billion, accounting for 49.5 percent of the company’s sales mix, up from 48 percent last year.

Front-of-store sales, including products such as cosmetics, candy bars and over-the-counter medications, rose 5.5 percent to C$1.11 billion, excluding tobacco, on a same-store basis.

“We were impressed with the way they were able to maintain good same-store sales, particularly in the light of Easter and the competitive environment,” said Candice Williams, an analyst at Genuity Capital Markets, in Vancouver, British Columbia.

Shoppers opened or bought 40 drug stores in the quarter, including 14 relocations. At the end of the quarter, the company had 1,242 stores, including 1,174 drug stores and 66 Shoppers Home Health Care stores, which supply medical equipment and devices, and two Murale stores, a stand-alone luxury beauty brand it opened last year.

Shoppers has ramped up its push into the Quebec market with an eye on the province’s growing prescription market.

Quebec is a highly coveted market because of the high number of prescriptions dispensed there -- 90,000 per drug store annually, versus 40,000 elsewhere in Canada.

Earlier this year the company forecast sales growth of 7.5 percent to 9 percent year-over-year, but it sounded a markedly less optimistic tone on Tuesday.

“We are pleased with our first-quarter results, particularly in the context of these challenging economic times,” said Jurgen Schreiber, president and chief executive, said in a release.

“Against this backdrop we remain cautious in our outlook for the balance of 2009, but confident in our ability to deliver continued growth in sales and net earnings.”

$1=$1.22 Canadian Reporting by Scott Anderson; editing by Peter Galloway

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