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Article Excerpt
Original Source: FD (FAIR DISCLOSURE) WIRE
OPERATOR: Good afternoon, ladies and gentlemen. Welcome to the Shoppers Drug Mart first quarter 2007 results conference call. Please note that this call is being Webcast live, and will also be archived on the Shoppers Drug Mart website, at www.shoppersdrugmart.ca. Please also be advised that this call is being recorded. I would now like to turn the call over to Mr. John Caplice, Senior Vice President, Treasurer, and Investor Relations. Please go ahead, Mr. Caplice.
JOHN CAPLICE, SVP, TREASURER & IR, SHOPPERS DRUG MART CORPORATION: Thank you, operator. Good afternoon, everyone. Thanks for joining us today. My name is John Caplice, and on behalf of Shoppers Drug Mart Corporation, I would like to welcome all of you to our first quarter conference call. With me on the call today to answer your questions are Jurgen Schreiber, President and Chief Executive Officer of Shoppers Drug Mart Corporation; George Halatsis, Executive Vice President and Chief Financial Officer; and Brad Lukow, Senior Vice President of Finance.
Before we begin, I would like to remind everyone that participants in today's discussion may be making forward-looking statements with respect to the Company's operating and financial plans and performance. Any such forward-looking statements are based on management's current assumptions, beliefs, and expectations. Inherent in any forward-looking statements are known and unknown risks, uncertainties, and other factors beyond the Company's ability to control or predict. We want to you caution you that actual results or developments may differ materially from those contemplated by any such forward-looking statements. Certain of the material risk factors and material assumptions that could cause actual results or developments to differ from expectations are contained in our first quarter earnings release that was issued earlier today.
Further information regarding these and other material risk factors and material assumptions is included in the Company's public filings with Provincial Securities Regulatory authorities, including without limitation, those described under the heading "Risks and Risk Management" in the Company's MD&A for the year ended December 30th, 2006, and under the heading "Risk Factors" in the Company's annual information form. Any forward-looking statements made in the context of today's discussion represent the Company's views only as of today's date. While the Company anticipates that subsequent events and developments may cause its views to change, the Company does not undertake to update any forward-looking statements.
Earlier today we issued a news release on our first quarter results, which included our financial statements and MD&A. By now, most of you have had an opportunity to review this information, so I'll just make a few brief comments on the quarter before we open up the call to questions from the analysts. Let me start by saying that, once again, we were pleased with our results. First quarter net earnings increased 18.7% to $85 million or $0.39 a share compared to $70 million or $0.33 a share last year. Total sales increased 10% in the first quarter to more than $1.8 billion and were up 6.4% on a same-store basis, with strong sales growth experienced in all regions of the country. Prescription sales, which accounted for 48.6% of the sales mix in Q1, increased 10.3% and were up 7% on a same-store basis. In the front of the store, first quarter sales increased 9.8%, with the Company continuing to experience sales gains in all categories. On a same-store basis, front store sales were up 5.8% in Q1. So without further delay, what I would like to do now is turn it back over to the operator, who will open up the call to questions from the analysts. Operator?
OPERATOR: Thank you, Mr. Caplice. (OPERATOR INSTRUCTIONS) Irene Nattel, RBC Capital Markets.
IRENE NATTEL, ANALYST, RBC CAPITAL MARKETS: I was wondering if you could quantify the impact of the genericization on same-store sales in the quarter?
JURGEN SCHREIBER, PRESIDENT & CEO, SHOPPERS DRUG MART CORPORATION: Basically, what -- we had a positive impact on the increase in generics. Generics increased from 43% to 45%, so if that wouldn't have happened, (inaudible) would not be 7%, it would be around 9%.
IRENE NATTEL: So it was about 200 basis points then?
JURGEN SCHREIBER: It was around 200 basis points, yes.
IRENE NATTEL: Okay, that's great. More of a general question, when we look at your balance sheet and you continue to reduce debt and equity continues...
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