Jean Coutu profit drops 10% on increased costs

Quebec-based pharmacy company Jean Coutu Group says its third-quarter profit fell 10 per cent from a year earlier as increased stock-based and operating expenses offset sales growth.

The company's net income was $56 million, down from $62.5 million, while net profit per share was flat at 30 cents.

The company said the appreciation of Coutu's stock value had increased compensation-related share-based expenses.
The cost of appreciation rights and deferred shareunits totalled $4.4million, compared with $0.4 million a year earlier.
It also said general and operating expenses were higher, primarily because of some stores in the startup phase.

Coutu's A shares were worth $27 when the third quarter ended, up from $18.26 a year earlier. The shares closed Wednesday at $27.38, prior to the earnings announcement, but dropped by more than $1 on Thursday.

Revenue for the quarter ended Nov. 29 was up 3.4 per cent from the third quarter of fiscal 2014, rising to $736.7 million from $712.5 million, due to overall market growth and the expansion of Coutu's network of franchised stores.

On a same-store basis comparing locations open for more than a year, the network's retail sales were up 3.1 per cent overall with pharmacy sales up 3.8 per cent and front-end sales up 2.0 per cent.