Dis-Chem pharmacy chain says Covid-19 has matured the e-commerce environment and consumer adoption by three to five years.
Dis-Chem has reported a decent rise in sales for the first five-and-a-half months of its financial year – despite losing out on about R200 million in transactions at the height of the lockdown in April. It has also experienced a surge in online sales as Covid-19 accelerated the move to e-commerce.
In a trading update, the discount pharmacy chain said it experienced a change in its sales and gross margin mix due to the restrictions, with an increase in sales of lower-margin Covid-19-related products and reduced impulse buying because of lower foot traffic through its stores. Due to social distancing and increased use of face masks and hand sanitisers, it said fewer people bought over-the-counter medicines for colds and flus. Healthcare and Nutrition performed exceptionally well as customers increased their spend on vitamins and immune boosters.
Sales grew by 8.8% to R11.7 billion for the 24 weeks to 15 August from the same period a year earlier. During level 5 of the lockdown, it was not allowed to sell 20% of its products, including higher-margin products from its Beauty category. Due to changing shopping patterns that resulted from the virus, stores in convenience centres played a more prominent role in the composition of turnover growth as customers shied away from larger malls. Online sales grew 344%, supported by increased investment in the group’s e-commerce platform. The group said Covid-19 had “matured the e-commerce environment and consumer adoption by three to five years”.
Additional costs were incurred due to measures it took to protect staff and customers from the pandemic. The largest expense was R23.5 million on vouchers for staff who continued to work at the frontline of the pandemic.
We continue to benefit from the resilient nature of the industry in which we operate and are encouraged by elements of the changing healthcare landscape that highlight the importance of our core dispensary and clinic offerings,” chief executive Ivan Saltzman said.
Last week, the company withdrew its appeal at the Competition Appeal Court after the Competition Tribunal fined it R1.2 million after charging it with excessive pricing for three types of surgical masks. While it believed the price adjustments it made in March for the masks were justified due to the increased costs it faced, it withdrew the appeal due to the negative publicity it was receiving in light of the current corruption scandal surrounding the procurement of personal protective equipment (PPE).
It plans to release its results for the six months to end-August on 5 November. Its shares rose 5.8% to R18.77 yesterday.
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