Dis-Chem group ramps up its store footprint and sees e-commerce boom
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Dis-Chem Pharmacies raised its annual dividend on Friday, while it said amid Covid-19 it had opened more stores to meet increased customer demand and had seen its online sales surge by 260.7 percent. Picture: Karen Sandison/African News Agency(ANA)
DURBAN - DIS-CHEM Pharmacies raised its annual dividend on Friday, while it said amid Covid-19 it had opened more stores to meet increased customer demand and had seen its online sales surge by 260.7 percent.
However, the group said it suffered direct Covid-19 costs of R56.6 million in the year to end February even though the retail pharmacy continued to keep its doors open as an essential services provider during the hard lockdown.
The costs mainly related to providing personal protection equipment, screening costs, and staff Covid-19 testing, with the largest cost related to vouchers valued at R23.5m that the group distributed to staff as a gratuity for their commitment to the front-line fight against the pandemic.
The group still managed to report a 11.8 percent increase in headline earnings per share (Heps) to 77.8 cents a share despite incurring the Covid-19 related costs.
“Despite the group being an essential service provider and trading throughout the lockdown period, the various Covid-19 regulations imposed during the different levels of lockdown restricted the group from trading over its usual operating hours and selling across all categories,” Dis-Chem said.
The move to level 5 of the national lockdown at the end of March last year meant that the group was unable to sell 20 percent of its products, including higher-margin products from its beauty category, it said.
However, its online sales surged by 260.7 percent as the various restrictions dramatically changed the shopping behaviour of its customers as they opted for online shopping.
“The strategic deployment of 39 additional hub spaces in response, together with continued investment in the group’s e-commerce platform, enabled it to meet the increased demand,” the group said.
As a result, Dis-Chem’s capital expenditure amounted to R401m, with R311m spent on expansionary expenditure as the group invested in additional stores as well as information technology enhancements across both the retail and wholesale segments, including R88m in SAP software licences.
“The balance of R90m relates to replacement expenditure incurred to maintain the existing retail and wholesale networks,” it said.
Dis-Chem managed to lift its annual revenue by 9.6 percent to R26.3 billion despite the difficult trading environment caused by the pandemic, with retail revenue increasing by 7.6 percent to R23.4bn.
After the reporting period and to the 10 weeks to end May 10, revenue was up by 12.6 percent compared to the same period last year.
The group opened 22 new stores, including three Mediclinic stores, and acquired two new pharmacies during the year, for a total of 194 stores at the end of February.
The group said new stores contributed R491m to revenue while newly acquired Baby City contributed R128m to revenue in January and February.
Its wholesale revenue grew by 16.4 percent to R19.3 billion while wholesale revenue to its own retail stores, still the biggest contributor, grew by 14.4 percent, and external revenue to independent pharmacies and The Local Choice (TLC) franchises grew by 27.7 percent and 37.1 percent respectively.
“TLC growth is due to a combination of an increase in TLC franchise stores from 104 to 122 together with increasing support of the supply chain from existing TLC franchisees,” the group said.
Dis-Chem increased its dividend by 148 percent to 31.1c after suspending it last year due to the uncertainties created by the Covid-19 outbreak.
Dis-Chem's share price slid 0.07 percent on the JSE on Friday to close at R27.56.
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