SUGAR RUSH
PRESIDENT’S CHOICE PRODUCTS SWEETEN SHOPPERS’ BOTTOM LINE, BOOSTING LOBLAW EARNINGS.
• PC Decadent chocolate chip cookies and other popular Loblaw Cos. Ltd. food brands are having a sweet impact on Shoppers Drug Mart’s performance.
Canada’s biggest pharmacy retailer sold more than a quarter of a billion dollars of Loblaw’s President’s Choice and No Name merchandise in its stores across Canada last year, Loblaw executives told a fourth quarter and year-end conference call with analysts Thursday.
During the quarter ended Jan. 2, same- store sales, an important retail metric, climbed five per cent at Shoppers Drug Mart. Front of store sales, including beauty products and food, rose 5.7 per cent on a same- store basis and pharmacy sales were up 4.2 per cent. Loblaw’s samestore sales rose 3.1 per cent, excluding gas.
After the $ 12.4 billion purchase of Shoppers in 2014, Shoppers axed its own private-label packaged foods including Nativa, Simply Food and Everyday Market in favour of Loblaw’s popular house brands.
“The PC brand resonates way more with consumers and the margin that we are obtaining on that business is significantly higher than what Shoppers was obtaining on its own business,” chief financial officer Richard Dufresne told analysts Thursday. “( It’s) creating a halo effect throughout the store that is benefiting all categories.”
Shoppers, which gained in its health and beauty business after the exit of Target Canada last year, has also rolled out a lineup of fresh and perishable items at 30 drugstores in Toronto, and began piloting a similar format in Regina since last spring.
“We are excited particularly about the performance of fresh food stores in the urban market of Toronto,” said president Galen Weston, saying fresh groceries will be added to 10 more Shoppers stores in the city. After a slow start in Regina, he said fresh food sales have improved at Shoppers, but the retailer is “not yet ready to determine if there is a suburban opportunity for Shoppers and fresh food.”
Net income in the period ended Jan. 2 was $ 128 million, or 31 cents per share, compared with profit of $ 247- million ( 60 cents) in the same period a year earlier. Overall revenue rose to $10.9 billion, up $241 million from $10.6 billion on a comparable week basis from the same period of 2014.