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Opening more stores is just the right medicine for Dis-Chem

| Store Openings

Opening 19 new stores, taking the total to 118, helped Dis-Chem Pharmacies grow interim revenue 14% to R9.95bn.

After-tax profit jumped 37.4% to R409m for the six months to end-August from the matching period in 2016, which was before the pharmacy chain listed on the JSE on November 18.

"The increase is a result of the additional centralisation of vendors and better trade terms with suppliers as the group continued to increase market shares across our core categories," CEO Ivan Saltzman said in the interim results statement issued on Friday morning.

Despite an 8% increase in its shares in issue following its initial public offering (IPO), Dis-Chem managed to grow its headline earnings per share (HEPS) by 38.1% to 46.8c. Its first interim dividend as a listed company was set to 18.73035c per share.

The group segments itself into a retail and a wholesale division. Its retail arm contributed 91% of the group’s R9.6bn total sales and a pre-tax profit of R629m, while its wholesale arm grew revenue 21% but contributed a R53m pre-tax loss.

Retail turnover grew 15% — 8.6% excluding new stores — against product inflation of 4%.

Its wholesale division, branded CJ Distribution, added a Cape Town centre to take its total warehouse space to 80,123m².

"From the increased wholesale space CJ Distribution will be focusing on increasing its current market share by continuing to service Dis-Chem, increasing supply to a greater number of The Local Choice (TLC) franchisees and serving a greater number of independent pharmacies," Saltzman said.

Looking ahead, Saltzman said the group expected low economic growth and an increase in taxes to continue constraining consumers in the second half of its financial year.

"As proven to be the case in the first half of the financial year, resilient markets in which the group operates will offer some protection against the relatively weak consumer environment."

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