/EINPresswire.com/ -- The Jean Coutu Group (PJC) Inc. (the "Corporation" or the "Jean Coutu Group") (TSX:PJC.A) reported today its financial results for the quarter ended May 28, 2016.

SUMMARY OF RESULTS

(Unaudited, in millions of Canadian dollars, except per share amounts)

		Q1 - 2017	Q1 - 2016
		$	$
Revenues		723.6	712.4
Operating income before amortization ("OIBA")		77.0	83.0
Net profit		49.0	50.6
	Per share	0.27	0.27

Highlights

• Revenues increased by 1.6% to $723.6 million during the first quarter of fiscal year 2017 compared with the same quarter last year.
  
  
• Net profit per share amounted to $0.27 for the first quarter of fiscal year 2017, same as for the first quarter of previous fiscal year.
  
  

Financial results

"During the first quarter, network retail sales showed an increase despite a very competitive environment and a difficult regulatory context, which demonstrates the effectiveness of our strategies and the strength of our brand," stated the President and CEO, François J. Coutu. "We will continue to make every effort required to reach our objectives and remain a leader in our sector."

Revenues

Revenues consist mainly of sales and other revenues derived from franchising activities. Merchandise sales to PJC franchisees made through our distribution centres account for the greater part of our revenues.

Revenues amounted to $723.6 million for the quarter ended May 28, 2016, compared with $712.4 million for the quarter ended May 30, 2015. This increase is attributable to the overall market growth and the expansion of the PJC network of franchised stores despite the deflationary impact on revenues of the volume increase in prescriptions of generic drugs compared with brand name drugs as well as the price reductions of generic drugs.

OIBA

OIBA decreased by $6.0 million to $77.0 million for the quarter ended May 28, 2016 compared with $83.0 million for the quarter ended May 30, 2015. A reversal of $0.1 million of liabilities for share-based payments instruments (stock appreciation rights and deferred share units) was recorded during the first quarter of fiscal year 2017 compared with $2.1 million for the first quarter of fiscal year 2016. The variation of the expense for those share- based payments instruments is mainly attributable to the fluctuation of the Corporation's common share market price. OIBA before the expense for those shared-based payments instruments decreased by $4.0 million compared with the same quarter last year. This decrease is mainly explained by an increase of $4.2 million in general and operating expenses such as higher labor expenses related to the transition to the new location in Varennes, annual inflation and higher volume distributed. OIBA as a percentage of revenues ended the first quarter of fiscal year 2017 at 10.6% compared with 11.7% for the same quarter of the previous fiscal year.

Pro Doc

Gross sales of Pro Doc drugs, net of intersegment eliminations, amounted to $51.5 million for the quarter ended May 28, 2016, compared with $50.3 million for the quarter ended May 30, 2015. Pro Doc's contribution to the consolidated OIBA amounted to $21.3 million for the quarter ended May 28, 2016, compared with $22.3 million for the quarter ended May 30, 2015. Pro Doc's contribution to the consolidated OIBA as a percentage of gross sales, net of intersegment eliminations, ended the first quarter of fiscal year 2017 at 41.4% compared with 44.3% for the same period of the previous fiscal year.

Net profit

Net profit amounted to $49.0 million ($0.27 per share) for the quarter ended May 28, 2016 compared with $50.6 million ($0.27 per share) for the quarter ended May 30, 2015.

During the 13-week period ended May 30, 2015, a tax provision of $4.7 million was recorded following a judgment rendered by the Quebec Court of Appeal. The hearing at the Supreme Court of Canada of the appeal by the Corporation was held on May 18, 2016. The Corporation is waiting the decision of the Supreme Court of Canada in this file.

Information on the PJC network of franchised stores

The Corporation carries on the franchising activity under the banners of PJC Jean Coutu, PJC Clinique, PJC Jean Coutu Santé and PJC Jean Coutu Santé Beauté, operates two distribution centres and coordinates several other services for the benefit of its franchisees.

For the quarter ended May 28, 2016, on a same-store basis, the PJC network's retail sales increased by 1.1%, pharmacy sales increased by 0.5% and front-end sales increased by 2.3%, compared with the corresponding period last year. Sales of non-prescription drugs, which represented 9.0% of total retail sales, increased by 3.9% compared with an increase of 4.4% for the corresponding period of fiscal year 2015.

Generic drugs reached 70.7% of prescriptions during the first quarter of fiscal year 2017 compared with 69.1% of prescriptions for the comparable period of the previous fiscal year. The increase in the number of generic drugs prescriptions with lower selling prices than brand name drugs had a deflationary impact on the pharmacy's retail sales.

For the first quarter of fiscal year 2017 the introduction of new generic drugs reduced pharmacy's retail sales growth by 0.2%. Furthermore, price reductions of generic drugs reduced retail sales growth by 0.2% and the periodic deductions agreed upon between the "Ministère de la Santé et des Services sociaux" (MSSS) and the "Association québécoise des pharmaciens propriétaires" (AQPP) reduced the growth of those sales by an additional 1.3%. The growth in number of prescriptions for total stores of 4.0% during this period exceeded by 3.2% the growth of pharmacy's retail sales (0.8%). This difference is mainly due to the deflationary impact of the increase of generic drugs prescriptions, a lower increase in sales of new expensive specialty drugs as well as the impact of the periodic deductions from the MSSS during the last quarter.

Network performance (1) (unaudited)		Q1 - 2017		Q1 - 2016
Retail sales (in millions of dollars)		$1,078.9		$1,062.6
Retail sales growth (in percentage)
Total stores
	Total	1.5	%	4.4	%
	Pharmacy	0.8	%	4.7	%
	Front-end (2)	3.0	%	3.4	%
Same store
	Total	1.1	%	3.8	%
	Pharmacy	0.5	%	4.2	%
	Front-end (2)	2.3	%	2.7	%
Prescriptions growth (in percentage)
	Total stores	4.0	%	3.2	%
	Same store	3.8	%	2.8	%

(1)	Franchised outlets' retail sales are not included in the Corporation's consolidated financial statements.
(2)	Front-end retail sales exclude sales of services which are included in the total retail sales growth.

PJC network of franchised stores expansion

During the first quarter of fiscal year 2017, there were 5 openings in the PJC network of franchised stores including 2 relocations. Also, 4 stores were significantly renovated or expanded.

As at May 28, 2016, total selling square footage of the PJC network amounted to 3,254,000 square feet compared with 3,188,000 square feet as at May 30, 2015.

Dividend

The Board of the Jean Coutu Group declared a quarterly dividend of $0.12 per share. This dividend will be paid on August 5, 2016, to all holders of Class "A" Subordinate Voting Shares and holders of Class "B" Shares listed in the Corporation's shareholder ledger as at July 22, 2016.

Regulatory changes

On June 10, 2016, the Québec National Assembly adopted the proposed Bill 81 An act to reduce the cost of certain medications covered by the basic prescription drug insurance plan by allowing calls for tender allowing the Minister of Health and Social Services to issue a call for tenders to add drugs to the Drugs List as well as, in relation to drugs having been the object of such a call for tenders, for the services of a wholesaler to supply the pharmacist owners. The Corporation notes that the conditions and mechanism applicable to any tender regime would be determined by ministerial regulation under proposed Bill 81, and that no details in this respect have been made available at this time.

Strategies and outlook

With its operations and financial flexibility, the Corporation is very well positioned to capitalize on the growth in the drugstore retail industry. Demographic trends are expected to contribute to the growth in prescription drugs consumption and to the increased use of pharmaceuticals as the primary intervention in individual healthcare. Management believes that these trends will continue and that the Corporation will maintain its growth in revenues through differentiation and quality of offering and service levels to its network of franchised stores, with a focus on its real estate program and operating efficiency. The growth in the number of generic drugs prescriptions, with lower selling prices than the branded name drugs, would however have a deflationary impact on retail sales in pharmacy. Additional generic drugs price decreases as well as increases in professional allocations paid to the pharmacist owners by the manufacturers of those products would reduce the OIBA of our subsidiary Pro Doc.

Conference call

Financial analysts and investors are invited to attend the conference call on the first quarter of fiscal year 2017 financial results to be held on July 5, 2016, at 8:30 AM (ET). The call-in number is 514-392-1478 or toll free at 1-866-542-4146. Media and other interested individuals are invited to listen to the live or deferred broadcast on The Jean Coutu Group corporate website at www.jeancoutu.com. A full replay will also be available by dialling 514-861-2272 or toll free at 1-800-408-3053 until August 4, 2016. The access code for the deferred broadcast is 1820853 followed by pound sign (#).

Supporting documentation (Management's discussion and analysis and investor presentation) is available at www.jeancoutu.com using the investors' link. Readers may also access additional information and filings related to the Corporation using the following link to the www.sedar.com website.

About The Jean Coutu Group

The Jean Coutu Group is one of the most trusted names in Canadian pharmacy retailing. The Corporation operates a network of 420 franchised stores in Québec, New Brunswick and Ontario under the banners of PJC Jean Coutu, PJC Clinique, PJC Santé and PJC Santé Beauté, which employs over 20,000 people. Furthermore, the Jean Coutu Group owns Pro Doc Ltd ("Pro Doc"), a Québec-based subsidiary and manufacturer of generic drugs.

This press release contains forward-looking statements that involve risks and uncertainties, and which are based on the Corporation's current expectations, estimates, projections and assumptions that were made by the Corporation in light of its experience and its perception of historical trends. All statements that address expectations or projections about the future, including statements about the Corporation's strategy for growth, costs, operating or financial results, are forward-looking statements. All statements other than statements of historical facts included in this press release, including statements regarding the prospects of the Corporation's industry and the Corporation's prospects, plans, financial position and business strategy may constitute forward- looking statements within the meaning of the Canadian securities legislation and regulations. Some of the forward-looking statements may be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "estimate", "project", "could", "should", "would", "anticipate", "plan", "foresee", "believe" or "continue" or the negatives of these terms or variations of them or similar terminology. Although the Corporation believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions.

These statements do not reflect the potential impact of any nonrecurring items or of any mergers, acquisitions, dispositions, asset write- downs or other transactions or charges that may be announced or that may occur after the date hereof. While the list below of cautionary statements is not exhaustive, some important factors that could affect the Corporation's future operating results, financial position and cash flows and could cause its actual results to differ materially from those expressed in these forward-looking statements are changes in the legislation or the regulatory environment as it relates to the sale of prescription drugs and the pharmacy exercise, the success of the Corporation's business model, changes in laws and regulations, or in their interpretations, changes to tax regulations and accounting pronouncements, the cyclical and seasonal variations in the industry in which the Corporation operates, the intensity of competitive activity in the industry in which the Corporation operates, the supplier and brand reputations, the Corporation's ability to attract and retain pharmacists, labour disruptions, including possibly strikes and labour protests, the accuracy of management's assumptions and other factors that are beyond the Corporation's control. These and other factors could cause the Corporation's actual performance and financial results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied in those forward-looking statements.

Forward-looking statements are provided for the purpose of assisting in understanding the Corporation's financial position and results of operation and to present information about management's current expectations and plans relating to the future. Investors and others are thus cautioned that such statements may not be appropriate for other purposes and they should not place undue reliance on them. For more information on the risks, uncertainties and assumptions that would cause the Corporation's actual results to differ from current expectations, please also refer to the Corporation's public filings available at www.sedar.com and www.jeancoutu.com.Further details and descriptions of these and other factors are disclosed in the Corporation's Annual Information Form under "Risk Factors" and also in the "Critical accounting estimates", "Risks and uncertainties" and "Strategies and outlook" sections of the Corporation's annual management's discussion and analysis for fiscal year ended February 27, 2016. The forward-looking statements in this press release reflect the Corporation's expectations as of the date hereof and are subject to change after such date. The Corporation expressly disclaims any obligation or intention to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by the applicable securities laws.

THE JEAN COUTU GROUP (PJC) INC.
Condensed consolidated statements of income				13 weeks
For the periods ended May 28, 2016 and May 30, 2015				2016		2015
(unaudited, in millions of Canadian dollars, unless otherwise noted)				$		$
Sales				653.7		643.8
Other revenues				69.9		68.6
				723.6		712.4
Operating expenses
	Cost of sales			568.7		557.7
	General and operating expenses			77.9		71.7
Operating income before depreciation and amortization				77.0		83.0
	Depreciation and amortization			10.1		7.6
Operating income				66.9		75.4
Financing revenus				(0.5	)	(0.5	)
Profit before income taxes				67.4		75.9
Income taxes				18.4		25.3
Net profit				49.0		50.6
Basic and diluted profit per share, in dollars				0.27		0.27
Condensed consolidated statements of comprehensive income				13 weeks
For the periods ended May 28, 2016 and May 30, 2015				2016		2015
(unaudited, in millions of Canadian dollars)				$		$
Net profit				49.0		50.6
Other comprehensive income
	Items that will be reclassified subsequently to net profit:
		Net change in cash flow hedge:
			Loss for the period	(0.6	)	-
			Reclassification of gain to non-financial assets	(0.1	)	-
			Income taxes	0.2		-
				(0.5	)	-
Total comprehensive income				48.5		50.6

THE JEAN COUTU GROUP (PJC) INC.

Condensed consolidated statements of changes in equity

For the 13-week periods ended May 28, 2016 and May 30, 2015

(unaudited, in millions of Canadian dollars)

		Capital stock	Treasury stock		Contributed surplus	Hedging reserve		Retained earnings		Total equity
		$	$		$	$		$		$
Balance at February 27, 2016		405.2	(2.2	)	58.7	0.6		658.0		1,120.3
	Net profit	-	-		-	-		49.0		49.0
	Other comprehensive income	-	-		-	(0.5	)	-		(0.5	)
Total comprehensive income		-	-		-	(0.5	)	49.0		48.5
Dividends		-	-		-	-		(22.2	)	(22.2	)
Share-based compensation cost		-	-		0.2	-		-		0.2
Balance at May 28, 2016		405.2	(2.2	)	58.9	0.1		684.8		1,146.8
Balance at February 28, 2015		416.0	(2.8	)	58.1	-		556.1		1,027.4
	Net profit	-	-		-	-		50.6		50.6
	Other comprehensive income	-	-		-	-		-		-
Total comprehensive income		-	-		-	-		50.6		50.6
Dividends		-	-		-	-		(20.6	)	(20.6	)
Share-based compensation cost		-	-		0.2	-		-		0.2
Balance at May 30, 2015		416.0	(2.8	)	58.3	-		586.1		1,057.6

THE JEAN COUTU GROUP (PJC) INC.
Condensed consolidated statements of financial position		As at May 28, 2016	As at February 27, 2016
(unaudited, in millions of Canadian dollars)		$	$
Current assets
	Cash and temporary investment	102.3	100.3
	Trade and other receivables	204.4	194.5
	Inventories	252.0	224.0
	Prepaid expenses	9.7	8.4
	Income taxes receivable	0.9	8.8
		569.3	536.0
Non-current assets
	Long-term receivables from franchisees	28.5	27.5
	Investment in associates and joint ventures	30.1	29.6
	Property and equipment	506.5	510.7
	Investment property	20.5	20.9
	Intangible assets	209.6	203.0
	Goodwill	36.0	36.0
	Deferred tax	0.1	0.1
	Other long-term assets	16.3	15.7
Total assets		1,416.9	1,379.5
Current liabilities
	Trade and other payables	244.3	234.8
		244.3	234.8
Non-current liabilities
	Deferred tax	7.2	6.6
	Other long-term liabilities	18.6	17.8
Total liabilities		270.1	259.2
Equity		1,146.8	1,120.3
Total liabilities and equity		1,416.9	1,379.5

THE JEAN COUTU GROUP (PJC) INC.
Condensed consolidated statements of cash flows		13 weeks
For the periods ended May 28, 2016 and May 30, 2015		2016		2015
(unaudited, in millions of Canadian dollars)		$		$
Operating activities
Net profit		49.0		50.6
Adjustments:
	Depreciation and amortization	10.1		7.6
	Interest income	(0.4	)	(0.5	)
	Income taxes	18.4		25.3
	Others	1.7		1.0
		78.8		84.0
Net change in non-cash asset and liability items		(23.1	)	(0.7	)
Interest received		0.4		0.5
Income taxes paid		(9.7	)	(61.7	)
Cash flow related to operating activities		46.4		22.1
Investing activities
	Investments in associates and joint ventures	(0.8	)	-
	Purchase of property and equipment	(8.5	)	(22.6	)
	Proceeds from disposal of investment property	0.1		-
	Net change in long-term receivables from franchisees	(1.9	)	(1.1	)
	Purchase of intangible assets	(9.5	)	(1.5	)
Cash flow related to investing activities		(20.6	)	(25.2	)
Financing activities
	Redemption of capital stock	(0.8	)	-
	Dividends paid	(22.2	)	(20.6	)
Cash flow related to financing activities		(23.0	)	(20.6	)
Effect of foreign exchange rate changes on cash and cash equivalents		(0.8	)	-
Net change in cash and cash equivalents		2.0		(23.7	)
Cash and cash equivalents, beginning of period		100.3		121.9
Cash and cash equivalents, end of period		102.3		98.2
Cash and cash equivalents consist of:
	Cash	88.3		98.2
	Temporary investment	14.0		-
		102.3		98.2

Source:
The Jean Coutu Group (PJC) Inc.
Andre Belzile
Senior Vice-President, Finance and Corporate Affairs
(450) 646-9760
Information:
Helene Bisson
Vice-President, Communications
(450) 646-9611, Ext. 1165