Newspaper article The Canadian Press

Jean Coutu Stepping Up Promotional Activity as Competition Intensifies

Newspaper article The Canadian Press

Jean Coutu Stepping Up Promotional Activity as Competition Intensifies

Article excerpt

Jean Coutu Q2 profit sinks without Rite-Aid


MONTREAL - Jean Coutu is stepping up its promotional activity to retain the loyalty of consumers in the face of intense competition from other pharmacy chains and discount retailers.

In the past quarter, the Montreal-area company offered deep promotional discounts by offering specials during two weekends that drove increased sales. That's on top of the regular weekly flyer it says is key to attracting customers into its stores.

"People expect promotions from the retailers even more," CEO Francois Coutu said Wednesday during a conference call about the company's second-quarter results.

He said Jean Coutu has to surprise shoppers by offering new deals as it competes hard, especially in the face of online sales that give consumers more shopping options than ever.

"We could see that aggressiveness will drag on probably past Christmas," Coutu told analysts.

As one of Quebec's largest pharmacy chains, dispensing the most prescriptions in the province, Jean Coutu is well-positioned to compete, the son of the company founder said.

Jean Coutu Group (TSX:PJC.A) said its business grew during the summer period but posted a smaller profit without last year's gains from the sale of shares in Rite-Aid.

The company earned $53.6 million, or 28 cents per share, in the quarter ended Aug. 30. That compared to $208.2 million or 99 cents per share in the second quarter last year which included a $158.3-million gain from the sale of some of its stake in Rite-Aid, a U.S.-based company that Jean Coutu had been divesting in stages. It sold the last of its Rite-Aid shares later in 2013.

Excluding the Rite-Aid gain, Jean Coutu's net income in the second quarter this year was up from $49.9 million or 24 cents a year earlier.

Revenue was up 3.15 per cent to $674.4 million from $653.8 million a year earlier. Same-store sales -- a key retail measure for the activity of stores open at least a year -- were up 2.4 per cent during the quarter. Pharmacy same-store sales grew 2.7 per cent and front-of-store same-store sales up 1.6 per cent.

Jean Coutu was expected to earn 28 cents per share in adjusted profits on $664. …

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