Dis-Chem's load-shedding expense rises to R36 million

Dis-chem, a retail pharmacy group, demonstrated a strong commercial performance despite tough economic headwinds, with group sales growing by 8.7% for the six months ending 5 February 2023.

Dis-Chem reported a 7.5% increase in retail sales during the period, excluding vaccines and Covid-19-related lines, in a trading update on Friday (17 February), while external wholesale income increased by 18.7%.

However, the business highlighted that, as a result of load shedding during the previous six months, diesel expenses at its outlets had risen by 54% to R36 million.

Despite this, the group’s early strategic investment in generator capacity resulted in minimal disruption to its ability to trade, according to the company.

Retail revenue increased 3.1% over the previous fiscal year, owing to good growth in cosmetics and home, confectionery, electronics, and appliances sales.

“During the period, Dis-Chem continued to increase its dispensary market share, extending its position as South Africa’s largest retail pharmacy group by dispensary market share,” said Chief executive Ivan Saltzman.

“The group experienced a strong recovery in the beauty category ahead of market recovery. The group continues to advance its ambitions in the baby category with steady improvement in baby-focused trade, specifically in Dis-Chem Baby City stores, highlighting the destination status of the brand,” he added.

According to Saltzman, the normalisation of the category mix is total income margin favourable, which continues to support the earnings delivery trajectory.

The table below illustrates the rise in retail revenue by category.

In terms of wholesale, revenue climbed by 8.6% year on year, with sales to its own retail locations growing by 7.0% and external client revenue increasing by 18.7%.

External wholesale income from sales to independent pharmacies climbed by 16.3%, owing to a 6.6% growth in client numbers and enhanced support from current customers.

“Despite the challenges, Dis-Chem continues to maintain its healthcare and nutrition market share and market leadership position,” said Saltzman. He added the group now has a store base of 312 stores, comprising 258 Dis-Chem and 54 Baby City stores.

The Baby Boom outlets that were bought on March 1, 2022, were all rebranded as Dis-Chem Baby City and provided R27.6 million in infant revenue for the period.