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Son takes helm of pharmacy empire
04-Aug-2007: Franois Coutu is returning to the helm of the pharmacy empire his father built.
Jean Coutu, the 80-year-old founder of the drugstore chain that bears his name, said yesterday he's stepping down as CEO after the company's annual general meeting in October.
The elder Coutu came back from retirement in 2005 to help his son - who was then CEO - with the integration of the company's struggling U.S. stores.
Jean Coutu will stay on as chairman of the company's board of directors.
Yesterday, the Jean Coutu Group Inc. reported a fourth-quarter loss of $6.9 million U.S., or 3 cents a share, as the company recorded costs for slashing its debt and for charges linked to the sale of the chain's U.S. stores to Rite Aid Corp.
For the 2006 quarter, the company reported net earnings of $30.3 million, or 12 cents a share.
Despite a hike in the regular quarterly dividend, from 3 cents to 4 cents a share, Coutu stock dropped four per cent yesterday to close at $14.33 in Toronto trading.
(While the company currently reports in U.S. dollars, it will change to Canadian currency in fiscal 2008.)
For the fiscal year ended June 4, net earnings were $140.8 million, or 54 cents a share, compared with net earnings of $103.8 million, or 40 cents a share, for the fiscal year ended May 27, 2006.
Fourth-quarter revenues were flat at $2.9 billion.
A pharmacist like his father, Franois Coutu, 52, is taking over the reins of a company that is virtually debt-free and in growth mode. He expects 19 new stores in the next fiscal year and the expansion and renovations of 44 existing pharmacies.
The renovation costs will be covered by Jean Coutu franchisees who operate all the Canadian stores. A plan outlining strategies for potential acquisitions is to be unveiled in the fall.
Franois Coutu will continue in his current capacity running the company's Canadian operations.
"I'm still a young fellow. I like to be hands on," Franois Coutu told The Gazette in an interview.
"But I'm not a one-man show."
After selling off its U.S. properties - in a deal that earned the chain $2.3 billion in cash, and a 32-per-cent stake in Rite Aid - the company was left with 328 stores in Canada, mostly in Quebec.
While his brother Michel Coutu will look after the company's U.S. interests as co-chairman of Rite-Aid, the new CEO will have the challenge of growing the chain in the rest of the country, while facing fierce competition from Shoppers Drug Mart Corp.
"The market wants a new strategic plan, a direction,'' David Hartley, an analyst with BMO Capital Markets in Toronto, told Bloomberg.
"They're boxed in in Quebec, and if they break out of Quebec, it could be expensive."
Source: Montreal Gazette