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Dis-Chem reports group revenue growth of 9.4% to R17,9 billion

| Retailer trading results

In the six-month period ending 31 August 2023, Dis-Chem reported Group revenue growth of 9,4% to R17.9 billion over the corresponding half year period to 31 August 2022.

“During the period, the Group was impacted by the base effects of the prior year’s performance, which were distinctly different across the two halves of the year. Looking forward, the Group anticipates a stronger end to FY24, following higher revenue growth in the first two-months of the second half, with Group revenue growing by 12.2%. This higher revenue performance is expected to continue through November and into the fourth quarter as we cycle softer months in the base. The anticipated performance improvement will be further supported by progress in cost control measures, with a particular focus on the management of staff costs,” says Rui Morais, Chief Executive Officer of Dis-Chem.

Earnings attributable to shareholders and headline earnings decreased by 16.7% and 17.9% respectively over the prior corresponding period. Basic earnings per share (EPS) and basic headline earnings per share (HEPS) are 58.3 cents and 58.2 cents.  When excluding the once-off property gain of R72m in the prior period, EPS and HEPS decreased by 8.9% and 9.5% respectively, illustrating the underlying trading performance of the Group.


Retail revenue grew by 8.1% to R15.6 billion with comparable pharmacy store revenue growth at 5.9%. Retail revenue growth was impacted by COVID-19 vaccine administration and testing services in the prior period compared to the current period. If the contribution of COVID-19 vaccines and testing are excluded from both periods, retail revenue grew by 9.2%. During the six months to 31 August 2023, 10 retail pharmacy stores were opened or acquired, resulting in 268 retail pharmacy stores and 54 retail Baby City stores as of 31 August 2023.

Wholesale revenue grew by 13.5% to R13.7 billion. Wholesale revenue to Dis-Chem’s own retail stores, still the biggest contributor, grew by 12.5%, while external revenue to independent pharmacies and The Local Choice (TLC) franchises grew by 19.1% over the comparable period. Independent pharmacy growth was 18.0% attributable to both new customers and increased support from the current base. TLC growth was 20.4% due to a combination of an increase in TLC franchise stores from 153 to 180 together with increasing support of the supply chain from existing TLC franchisees.

Total income

Total income grew by 5.1% to R5.4 billion, with the Group’s total income margin being 30.5% compared to 31.7% in the prior comparative period (31.3% when excluding the property gain in the prior period relating to the purchase of the wholesale properties).

Retail total income grew by 6.5% with the retail total income margin decreasing from 30.2% to 29.8% over the comparable period. If the contribution of COVID-19 vaccines and testing are excluded from both periods, retail total income grew by 7.7%. The decrease in retail margin is due to continued investment in promotional activity to ensure market share retention, which impacted the transactional margin in personal care and beauty.

Expenses grew by 9.4% over the comparable period. Excluding depreciation, expenses grew by 8.5% over the comparable period.

Retail expenses grew by 11.3%, while excluding depreciation they grew by 10.8%, over the comparable period, as the Group invested in new stores and acquisitions. Retail costs were also influenced by the employee cost component increasing by 9.8%, higher diesel costs to run generators for stores to remain operational during load-shedding, higher IT costs associated with the remaining roll-out of the new point-of-sale system to stores, and increased advertising expenditure.

Wholesale expenses grew by 5.5%, while excluding depreciation they grew by 4.3%. This was due to an increase in volumes through the wholesale space resulting in an increase in casual labour shifts as well as higher costs relating to diesel, courier costs, and municipal costs.

The Group has declared an interim dividend of 23,23c per share based on 40% of headline earnings, a decrease of 17,4% from the prior comparable period.

The Group expects the consumer to remain constrained by the current economic climate. However, the resilient nature of the markets in which the Group operates, together with the brand position, proven business model, and heightened focus on key drivers of growth, will position it for success in the future.

Furthermore, the Group has outlined its strategic areas of focus aimed at delivering enhanced shareholder returns. In respect of the company’s property portfolio, it plans the addition of approximately 137,000m² of retail space over 36 months. Regarding total income margin and working capital management, the Group plans to maintain and incrementally improve these key cash generative metrics over the medium-term. Through various cost control initiatives, the Group will target sustained positive operating leverage, with early benefits already seen.  The recent acquisition of a new 63,000m² warehouse facility in Gauteng will support the retail property expansion strategy as well as the continued growth into the independent pharmacy market. The focus on the Integrated Healthcare Ecosystem that reimagines how healthcare gets accessed by consumers through a portfolio of health-centric financial services products remains core to the longer-term ambitions of the Group.

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