Shoppers Drug Mart 3q09 press release

November 11, 2009 – Toronto, Ontario – Shoppers Drug Mart Corporation (TSX: SC) today announced its financial results for the third quarter ended October 10, 2009.

Third Quarter Results (16 Weeks)
Third quarter sales increased 7.9% to $3.013 billion, with the Company continuing to experience strong sales growth in all regions of the country. The Company’s capital investment program, which has resulted in an 11.6% increase in drug store selling space compared to a year ago, continues to have a positive impact on sales growth. Effective marketing campaigns, combined with differentiated and impactful promotions utilizing the Shoppers Optimum loyalty card program, also contributed to top-line growth. On a same-store basis and excluding tobacco products, sales increased 4.8% during the quarter.

Prescription sales increased 9.7% in the third quarter to $1.481 billion, accounting for 49.1% of the Company’s sales mix compared to 48.3% in the same period last year. On a same-store basis, prescription sales increased 5.8%, driven by strong growth in the number of prescriptions filled, while increased generic utilization continued to have a deflationary impact on sales growth in the category. In the third quarter of 2009, generic molecules represented 52.8% of prescriptions dispensed compared to 51.5% of prescriptions dispensed in the third quarter of 2008.

Front store sales increased 6.2% in the third quarter to $1.532 billion, with the Company continuing to experience sales gains in all categories except tobacco. On a same-store basis and excluding tobacco products, front store sales increased 3.9%.

Third quarter net earnings increased 6.6% to $171 million or 79 cents per share (diluted) from $160 million or 74 cents per share (diluted) a year ago. This increase was driven by strong sales growth, improved purchasing synergies and a continued emphasis on cost reduction, productivity and efficiency, the benefits of which were partially offset by increased amortization and higher expenses at store-level associated with the continued expansion of the store network, along with stepped-up investments in pricing and promotional activities.

Commenting on the results, Jürgen Schreiber, President and CEO stated, “We are pleased with our third quarter results and our performance thus far in 2009, as we continue to deliver growth in these challenging economic times. The strength of our pharmacy programs and services, combined with effective front store merchandising and marketing initiatives, have us well-positioned heading into the holiday season and the final weeks of 2009.”

Year-to-date Results (40 weeks)
Sales for the first three quarters of 2009 increased 8.2% to $7.497 billion, with prescription sales up 10.3% and front store sales up 6.3%. On a same-store basis and excluding tobacco products, sales increased 4.8%, with prescription sales up 5.8% and front store sales up 4.0%. During the first three quarters of 2009, prescription sales accounted for 49.0% of the Company’s sales mix compared to 48.1% in the same period last year.

Net earnings for the first three quarters of 2009 increased 6.8% to $414 million or $1.90 per share (diluted) from $388 million or $1.78 per share (diluted) a year ago.

Store Network Development
During the third quarter, 37 drug stores were opened or acquired, 15 of which were relocations, and one smaller drug store was closed. The Company also added two Murale luxury beauty stores to its network during the quarter. At quarter-end, there were 1,282 stores in the system, comprised of 1,212 drug stores (1,170 Shoppers Drug Mart/Pharmaprix stores and 42 Shoppers Simply Pharmacy/Pharmaprix Simplement Santé stores), 66 Shoppers Home Health Care stores and four Murale stores. Drug store selling space was approximately 11.6 million square feet at the end of the third quarter, an increase of 11.6% compared to a year ago.

Dividend
The Company also announced today that its Board of Directors has declared a dividend of 21.5 cents per common share, payable January 15, 2010 to shareholders of record as of the close of business on December 31, 2009.