TORONTO (Reuters) - Shoppers Drug Mart SC.TO reported a 16 percent jump in fourth-quarter profit on Tuesday and boosted its dividend by 34.4 percent, as targeted cost reductions offset a rising Canadian currency.
This year, Canada’s largest pharmacy chain expects sales to grow by 10.5 percent to 12 percent, boosted by same-store sales growth, and plans to allocate about C$500 million ($500 million) to capital expenditures.
The company’s stock climbed C$2.20, or 4.6 percent, to C$49.72 on the Toronto Stock Exchange immediately after the results were posted.
Shoppers earned C$153.7 million, or 71 Canadian cents a share, which met expectations. That was up from C$132.5 million, or 61 Canadian cents a share, in the same period a year earlier.
Revenue was up more than 7 percent to C$2.17 billion in the period ended December 29.
On average, analysts had expected earnings of 70 Canadian cents a share on revenue of C$2.20 billion, according to Reuters Estimates.
Shoppers, which operates in Quebec under the Pharmaprix banner, boosted its dividend, payable in April, to 21.5 Canadian cents a common share.
The company’s key same-store sales figure rose 3.9 percent in the quarter.
Prescription drug sales were up 8.8 percent to C$975 million. Front-of-store sales, which include a range of items such as cosmetics and household products, rose 6.4 percent to C$1.19 billion.
It said the rise of generic drug use partly deflated prescription sales growth, while lower prices as a result of the appreciating Canadian dollar took a bite out of front-of-store sales.
Shoppers has expanded products lines and added stores in recent quarters, operating more like a mini-department store. Including seven relocations, it opened or acquired 30 drug stores and closed one in the quarter.
Eighty percent of its 2008 capital expenditures is targeted at its store network, including 120 to 130 new outlets.
Shoppers’ competitors include Katz Group Canada’s Rexall and Pharma Plus chains, and Quebec-based Jean Coutu Group PJCa.TO.
Reporting by Jonathan Spicer; editing by Rob Wilson