Shoppers Drug Mart Takes Hostages

Shoppers Drug Mart (SC) upset by the province of Ontario’s attempt to control drug costs started to take hostages. They let it be known that 350 pharmacy students are no longer required and will be out of summer jobs this year. The pharmacy students, many of whom study at the University of Toronto in a state of the art building funded by wealth created through Shoppers Drug Mart, are being told they are no longer needed.

But here is the real disclosure issue Shoppers CEO Jurgen Schreiber let it be known that he already “wasted” nine months negotiating with Ontario in what was essentially “an artificial negotiation.” according to an article in Globe and Mail.

So Jurgen you have been sitting on this one for nine months. You did not prepare investors that this was not looking good and then you got smoked.

Bad Jurgen. Very bad. Now if I were a lawyer, which I am not, I would wonder if there was an attempt to withhold material information. Confidentiality agreement you say. You look a little too frantic by issuing hysterical press releases.

Health care costs keep climbing. Do not be surprised that governments need to do something. Shopper’s management team was asleep. They were seduced by their own retail strategies and lost sight of the core business. Investors were also asleep on this one.

By the way the press release you issued that says “no distribution on US wire services” is widely available on almost any investment information website available to Americans and the whole world. What were you thinking?

Disclosure: No position in this stock