Shoppers Drug Mart Analysis

Nature of the Company

Overview

The Company is the licensor of full-service retail drug stores operating under the name Shoppers Drug Mart (Pharmaprix in Québec). Shoppers is the largest drug store group in Canada based on number of stores and system sales, and is the only national drug store group, with the number one market share position in prescription sales in eight out of ten provinces and the number one or two market share position in most of Canada’s major metropolitan areas. As at January 1, 2010, there were 1,182 Shoppers Drug Mart/Pharmaprix retail drug stores owned and operated under license by Shoppers Associates.

In addition, Shoppers owns and operates 63 Shoppers Home Health Care stores, making it the largest Canadian retailer of home health care products and services.

The Company’s business strategy is designed to drive system sales growth, maximize gross margin dollars, leverage cost reduction opportunities and build customer loyalty, thereby generating increased revenue and profitability.

The Company has successfully leveraged its leadership position in pharmacy and its convenient store locations to capture a significant share of the market in front store merchandise. Front store merchandise categories include over-the-counter medications, health and beauty aids, cosmetics and fragrances (including prestige brands), everyday household needs and seasonal products. The Company also offers a broad range of high-quality private label products marketed under the trademarks Life Brand, Quo, Etival, Baléa, Everyday Market, Bio-Life, Nativa, Simply Food and Easypix, among others, and value-added services such as the HealthWatch program, which offers patient counseling and advice on medications, disease management and health and wellness, and the Shoppers Optimum program, one of the largest retail loyalty card programs in Canada. In fiscal 2010, the Company recorded consolidated sales of approximately $10.4 billion.

OVERALL FINANCIAL PERFORMANC

The...