API puts best foot forward with Priceline Eli Greenblat October...

API puts best foot forward with Priceline Eli Greenblat
October 29, 2010



A PLAN by Australian Pharmaceutical Industries to accelerate the roll-out of its Priceline beauty and healthcare stores to hit a target of 500 shops in the near term comes as it claims to have taken market share from the supermarkets and hooked 3.2 million members into its loyalty club.

The chief executive of API, Stephen Roche, said it had completed its restructure, following some lean years characterised by operational mishaps and financial calamities, and was now focusing on growth.

''It's about utilising the assets that we have within our control and Priceline has real potential and it's time to start capitalising on that.''

Advertisement: Story continues below He said Priceline could move quickly to 500 sites in Australia, from 331 at present, propelled by its model of affordable beauty and healthcare products, a close relationship with suppliers and its growing club card program.

API had won over customers despite a price battle by supermarkets to take a greater share of the beauty space, he said.

''We have actually gained share in health and beauty over the last 12 months even in that war.

''We can compete and we can hold our own against [supermarkets], remembering that we might have similar products but it is about actually how you attract customers to your store and why they have a reason to visit and purchase.''

API yesterday posted a 4.6 per cent rise in full-year revenue from its Priceline, pharmaceutical wholesale and chemist banner group to $3.71 billion. For the year to August 31 profit rose 23.6 per cent to $22.65 million.

Comparable store sales for Priceline rose 1.4 per cent in what the company described as a challenging retail environment, while the pharmacy business recorded sales growth of 4.7 per cent.

API said its Priceline Clubcard membership was now in excess of 3.2 million.

Mr Roche said the underlying performance of API's retail business showed its strength despite a hard retail environment. "The consumer remains extremely cautious in their spending habits, largely driven by interest rate speculation,'' he said.

API confirmed projected savings of $10 million would be realised from its supply chain transformation program but the company refrained from offering guidance, saying the outlook was tempered by potential regulatory changes, Christmas trading and general economic conditions.