Pedestrians walk past a Jean Coutu pharmacy in Montreal.
The H1N1 flu outbreak gave pharmacy chain Jean Coutu Group Inc. a boost as consumer concerns helped to increase overall sales and profit in its latest quarterly results.
"Obviously, people realized the situation and renewed some of their pharmacy needs," chief executive François Coutu said in an interview Friday.
He noted, however, that Quebec's largest drugstore chain also benefited from additional customers who were driven into stores by promotions marking its 40th anniversary and the addition of new and renovated stores.
The Montreal-area company said its revenue for the three months ended Nov. 28 improved to $678.1-million from $620.3-million a year earlier.
That is an increase of more than 10 per cent, year to year.
Jean Coutu declined to single out the financial impact of H1N1. But sales of non-prescription drugs, which represent 10 per cent of total retail sales, increased by 16 per cent during the quarter, up from 6.4 per cent a year ago.
Total sales grew by 8.6 per cent, while sales for stores open at least a year - same-store sales - increased 6.3 per cent.
"We're very pleased with the situation. It comes at a time where obviously it's tougher out there," Coutu added, noting heightened competition from Shopper's Drug Mart's Pharmaprix and independent pharmacies.
Increased consumer traffic in stores also boosted beauty sales by 7.4 per cent, confectionery by more than 7 per cent and cosmetics by 5 per cent. Efforts by department stores to maintain their share of this key category failed to hurt Jean Coutu's efforts, Mr. Coutu told analysts during a conference call.
The pharmacy chain earned $44.6-million in the quarter, or 19 cents per share. That's a vast improvement from the year-earlier period when it lost $399.2-million, or $1.66 per share, largely because of writedowns of its investment in the Rite-Aid pharmacy chain in the United States.
With its investment in the U.S. chain totally written down, Jean Coutu's results are no longer impacted by continuing losses at Rite Aid.
Excluding last year's writedown, Jean Coutu earned $36.7-million of 15 cents per share in the third quarter of fiscal 2009.
The third-quarter results beat analyst expectations.
Irene Nattel of RBC Dominion Securities said Jean Coutu got "a slight boost from H1N1" and that non-pharmacy sales growth far exceeded expectations and were the strongest in memory.
"However, we expect this boost to be short-lived as overall consumer spending remains tepid and would therefore expect investors to discount this boost," she wrote in a report.
Jean Coutu's profit continued to be helped by private label products and growth in sales from its generic drug company Pro-Doc. Pro-Doc's sales grew from $9.2-million to $26.8-million in the quarter.