TORONTO (Reuters) - Canadian pharmacy chain Jean Coutu Group Inc PJCa.TO reported a bigger quarterly loss on Tuesday as it took a hit from the performance of 30-percent-owned Rite Aid Corp (RAD.N) in the United States.
Revenue rose at its operations in Canada, where the company reported a “satisfactory” performance despite a more cautious attitude shown by consumers.
“It’s generalized, it’s a worldwide situation,” Francois Coutu, Jean Coutu’s president and chief executive, told a conference call. “The price of gas — everyone is suffering from it. When you want to be careful on your spending, this comes into play.”
Jean Coutu lost C$20.2 million ($19.8 million), or 8 Canadian cents per share, in its first quarter, ended May 31, 2008, compared with a loss of C$6.4 million, or 2 Canadian cents a share, in the corresponding quarter of 2007.
Jean Coutu said its share of net losses at Rite Aid, the No. 3 U.S. drugstore chain, was C$53.4 million, or 21 Canadian cents a share.
Before special items and its share of Rite Aid’s loss, Jean Coutu earned C$33.2 million, or 13 Canadian cents a share, compared with C$25.1 million, or 10 Canadian cents a share, in the corresponding year-before quarter.
Analysts had expected Jean Coutu to earn 13 Canadian cents a share before exceptional items, according to Reuters Estimates.
Jean Coutu is the dominant pharmacy in the Quebec market and has outlets in other Canadian provinces. Shoppers Drug Mart SC.TO is Canada’s biggest drugstore chain.
The company sold its Brooks and Eckerd drugstore chains in the United States last year to Rite Aid for $2.36 billion in cash and 250 million shares of Rite Aid. As of May 31, 2008, Jean Coutu held a 29.8 percent equity stake in Rite Aid.
Late last month, Rite Aid reported a bigger-than-expected first-quarter loss, hit by higher operating costs and acquisition-related expenses.
Jean Coutu’s total revenue dropped to C$574.3 million in the quarter from C$3.26 billion in the year-before quarter, without the benefit of revenue from the chains it sold to Rite Aid. It said revenue from its Canadian operations rose to C$574.3 million from C$548.4 million.
“The difference is due to the sale of U.S. operations to Rite Aid at the end of fiscal 2007,” Francois Coutu said.
“Rite Aid has made considerable progress on the integration on the acquired drug store network,” he said. “They expect to complete the integration by fall 2008.”
Jean Coutu’s operating profit slipped to C$49.2 million from C$50.8 million, which the company said was a result of a change in sales mix, generic drug price reductions and an increase in marketing expenses.
In the first quarter, the company said its Canadian network retail same-store sales rose 4.2 percent.
At midday on Tuesday, shares of Jean Coutu were up 30 Canadian cents, or 3.8 percent, at C$8.23 on the Toronto Stock Exchange.
Reporting by Jennifer Kwan; Editing by Peter Galloway