Source: The Canadian Press

Shoppers Drug Mart (TSX:SC) is teaming up with a bank to offer financial services as it diversifies away from its core pharmacy business that is being hit by generic drug reforms in Ontario.

Canada’s largest drug store chain joins other retailers including Loblaw (TSX:L) and Canadian Tire (TSX:CTC) in offering banking services to its customers.

President and chief executive Jurgen Schreiber said the retailer would not act as a bank, but instead work with a partner, who he did not identify, to offer financial services.

“That is something that we do not have at this point in time in our stores, but we will offer it,” Schreiber told an investor conference.

Shoppers already offers a credit card through a joint operation with MBNA.

The retailer also plans to cut costs in other areas and expand its focus on front-of-store sales on everything from make-up to food and electronics sections in an effort to recoup losses from its pharmacies.

The chain says its bottom line will be hit by recent changes to Ontario legislation that prohibit pharmacists from accepting money from generic drug vendors in exchange for stocking their products.

Schreiber said the company is shifting gears to focus on its current store based to drive sales and margins instead of a recent focus on opening new stores.

“We will drive the business much more out of the existing stores and relocations and expansions and we’ll shift away from net new stores,” he said.

“In the great times and the big times we had about 50 new stores every year, next year without acquisitions it will about 15.”

Shares in Shoppers closed up 72 cents at $38.43 on the Toronto Stock Exchange.