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Dis-Chem keeps on expanding with 21 new stores

| Store Openings

JSE-Listed pharmacy group Dis-Chem Pharmacies said it had increased its stores portfolio by opening 21 new stores in the year to end February, taking the total to 129.

The group’s wholesale division, CJ Distribution, is set to fuel the group’s growth in the year ahead by acquiring another Cape Town wholesaler, pending the Competition Commission approval.

“The acquisition adds scale to the wholesale operations and provides opportunities to unlock retail and wholesale synergies,” the group said.

Dis-Chem, which has various core categories in its portfolio, which include dispensary, personal care and beauty, healthcare and nutrition and babycare, said it had experienced strong volume growth during the year as a result of maturing and increasing space. The group said it continued to gain market share in all the categories.

Chief executive Ivan Saltzman said the growth was expected, even though the consumer market remained constrained.

“The resilient markets in which the group operates will offer some protection against the weak environment; the group is well positioned to benefit from additional consumer disposable income,” Saltzman said.

He added that Dis-Chem remained focused on adding retail stores and scale to its base and leveraging off an invested cost base in both the retail and wholesale segments.

In the results, Dis-Chem reported a 13.3percent increase in total income to R5.46billion, with a trading margin of 27.9percent. The increase was a direct result of better trade terms negotiated with suppliers, specifically as the group continued to increase market share in core categories. Retail turnover increased by 15percent from the prior year with like-for-like turnover increasing by 6.6percent.

Higher profit

Profit attributable to equity holders of the parent was higher at R684.3million, up from R612.3m, while headline earnings per share increased to 79.6cents a share, up from 74.7c as compared to last year.

Dis-Chem declared a final dividend of 12.7c a share, taking its total to 31.4c a share.

Saltzman said the performance was in line with expectations as set out during its listing process in November 2016.

“Although consumer spend remains constrained, we continue to see growth opportunities across all channels of the market in which we operate.

"Store growth and efficiencies, trading densities and tight cost controls remain at the forefront of our short and medium-term strategy to ensure sustainable growth and will continue to generate robust results in the future,” he said.

The group’s retail segment increased operating profit by 19.4percent, and the group attributed this to a strong retail performance in a maturing store base, good margin management and the new stores added during the year.

However, it said, offsetting the increased operating profit in the retail segment, the wholesale segment extended operating losses to R169m.

-BUSINESS REPORT 

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