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Dis-Chem’s revenue for the 22 weeks to February rose 13.1% to R8.5bn despite it battling increasing competition in a weak economic climate and labour issues.
Dis-Chem’s revenue for the 22 weeks to February rose 13.1% to R8.5bn despite it battling increasing competition in a weak economic climate and labour issues.

Dis-Chem revenue increase driven by store roll-out

RETAILER NEWS

By Michelle Gumede - Feb 16th 2018, 10:15

Dis-Chem’s revenue for the 22 weeks to February rose 13.1% to R8.5bn despite it battling increasing competition in a weak economic climate and labour issues. 

With a market capitalisation of R32.4bn, Dis-Chem is one of the leading retail pharmacy groups in SA.

Among its offerings is a dispensary category, while its retail front shop includes personal care and beauty, healthcare and nutrition and baby care.

Turnover generated from its retail division was up 14.2% to R7.9bn compared to the matching period in 2016.

Comparable store growth was at 5.5% and sales price inflation stood at 2.5%. Dis-Chem’s wholesale division grew 19%.

Dis-Chem CEO Ivan Saltzman that was "comfortable" with the Dis-Chem brand’s positioning, the focus of which he said remained on providing an "unrivalled pharmacy offering, dedicated front shop service and a differentiated stock range" that allowed it to trade through challenging market conditions.

A portfolio manager at Gryphon asset management, Casparus Treurnicht, said that the growth was driven by the mass roll-out of its new stores.

"Dis-Chem did more than one per week, which is phenomenal for its scale," said Treurnicht. Dis-Chem is aiming to have 200 stores by 2023. "We expect price inflation will be at lower levels in 2018 as a result of the announced SEP (single exit price) increase of 1.26%," said Saltzman.

"Supported by our store roll-out strategy, we remain focussed on ensuring we continue to grow our market share in the categories that we serve."

But Treurnicht cautioned investors not to overpay for growth as these stores also took a bit longer to "mature and reach their optimal margins".

Close competitor Clicks, which has a market capitalisation of R47bn, also delivered impressive growth in a similar period.

In the 20 weeks to January, the health and beauty retailer reported an 11.3% increase in turnover to R11.1bn, lifted by strong promotional offerings.

Meanwhile, unionised Dis-Chem workers downed tools in January in protest over unpaid December bonuses and what they said were unfair labour practices.

However, the National Union of Public Service and Allied Workers, which was negotiating on their behalf, managed to reach an agreement granting it organisational rights relating to stop-order facilities, provided the union membership was not less than 1,500 members.

Workers also got paid out their December bonuses and later stopped their strike.
© BusinessLIVE MMXVIII 

Read more about: retailer | pharmacy | dischem. retail |

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