|Title:||United States and Canada top four chain drugstores by net margin in percentages for 2010|
|Source:||Chain Drug Review|
Start of full article - but without data
Shoppers Drug Mart X.X% Jean Coutu X.X% CVS Caremark X.X% Walgreens X.X%
Source: Racher Press research.
NEW YORK -- With the Jean Coutu Group returning to the black, four of the six remaining publicly held drug retailing companies generated profits in fiscal 2010.
For the fourth straight year since its March 2007 merger with Caremark Rx Inc., CVS Caremark Corp. led the group's earnings parade, followed by Walgreen Co. and Shoppers Drug Mart (SDM).
SDM's fellow Canadian franchisor Coutu pulled up in fourth place in the earnings column after two years of red ink arising from its stake in Rite Aid Corp. Rounding out the group, Rite Aid and drugstore.com continued their stays in the red.
With pressures on its pharmacy benefits management segment cutting into solid profit growth in its retail segment, CVS saw earnings from continuing operations slip to $X.XX billion in its year ended December XX, 2010, from $X.XX billion in 2009. Walgreens, meanwhile, boosted its bottom line to $X.XX billion in its year ended August XX, 2010, from $X.XX billion in fiscal 2009, despite costs related to its acquisition of Duane Reade.
Converted to U.S. currency, the group's two Canadian operators registered year-over-year gains. At SDM, net income rose to $XXX.X million for the year ended January X, 2011, from $XXX.X million in fiscal 2009. With results now reflecting its profitable Canadian franchise operations, Coutu rebounded to earnings of $XXX.X million for its year ended February XX, 2010, from a $X.XX billion loss in fiscal 2009 that resulted from a huge write-down on its Rite Aid investment.
Because of the more profitable nature of their franchise business platforms, SDM and Coutu reported the leading net margins, followed by CVS Caremark and Walgreens.
With perennial gross margin leader Duane Reade now part of Walgreens, CVS' retail operations took over first place in this category, followed by drugstore.com (slated to be acquired by Walgreens), Walgreens and Rite Aid. Yet Walgreens was the only company to post a year-over-year improvement in this metric in fiscal 2010, gaining XX basis points to XX.X%.
After its move back into the black, Coutu assumed leadership in return-on-investment, followed by Walgreens, SDM and CVS Caremark.
Looking ahead, the leading drug chains will be razor-focused on boosting their financial results to augment market share, since opportunities for dramatic growth via mergers or acquisitions remain scarce, according to industry analysts.
"Further large-scale acquisition opportunities are limited as CVS Caremark, Walgreens and Rite Aid--the three largest chain [drug] retailers--account for approximately XX% of industry revenue (or XX% including CVS' pharmacy benefit management business)," Fitch Ratings observed in its 2011 U.S Retail Outlook report. "Therefore, share gains will depend on generating above-average organic growth, store closings or share losses by weaker independents and regional chains, small market fill-in acquisitions, and prescription file buys."
Sanford Bernstein & Co. analyst Helene Wolk commented: "Expect CVS and Walgreens to be actively looking at some of those small chains."
Net income (X)
CVS Caremark $ X.XX bil. Walgreens X.XX bil. Shoppers Drug Mart XXX.X mil.
Net margin Shoppers Drug Mart X.X% Jean Coutu X.X% CVS Caremark X.X% Walgreens X.X%
Gross margin (X) CVS XX.X% Walgreens XX.X% Rite Aid XX.X%
Jean Coutu XX.X% Walgreens XX.X% Shoppers Drug Mart XX.X% CVS Caremark X.X%
(X.) Fiscal year. All in U.S. dollars. SDM net income is converted
from Canadian dollars using the rate as of April XX, 2011.
(X.) Fiscal year. Reported margins are not necessarily comparable.
In many cases, gross margins take into account store occupancy costs,
warehousing, delivery and buying expenses. The margin stated here
for CVS Caremark is for retail pharmacy operations.
X. Fiscal year, based on year-end shareholder equity.
Source: Racher Press research.