DURBAN - Dis-Chem Pharmacies is forging ahead with plans to open new retail stores to boost its portfolio in the year ahead.
The pharmacy group benefited by gaining market share in the six months to end August and new stores contributed to the group’s revenue, which leapt 9.4 percent to R10.5 billion.
Going forward the group said two stores had already been added since the reporting period and an additional 13 store openings were planned through to February 2019.
“We reiterate our guidance to end the full year with a minimum of 151 stores,” the group said.
During the period, the group opened seven new stores and they contributed R155 million to revenue.
In the results, retail revenue increased by 9.8percent to R9.6bn with comparable store revenue at 3.5percent and selling price inflation of 1.2 percent.
The group said comparable store revenue and selling price inflation were, and would continue to be, negatively impacted by the 1.26 percent single exit price (SEP) increase effective March 1, 2018.
The SEP is prescribed by the Department of Health and impacts a third of Dis-Chem’s retail sales.
Renier de Bruyn, an investment analyst at Sanlam Private Wealth, said the SEP increases were mostly guided by a formula, and the weaker rand should lead to a higher increase the next time the SEP was revised.
“However, there is some discretion by the Minister of Health on the timing and magnitude thereof, who may potentially delay SEP increases given the current state of the consumer, which is frustrating for industry players,” De Bruyn said.
The group’s wholesale revenue increased by 15.1 percent to R7.4bn.
Profit for the period was up to R445m compared to last year’s R402.88m, while diluted earnings per share (Eps) rose to 51.7 cents a share, up from 46.8c.
The group declared a gross dividend of 20.70 cents per share.
Chief executive Ivan Saltzman said the recent fuel hikes and VAT increase continued to put the consumer on the back foot.
“After tough trading conditions in April, we experienced another extremely tough trading month in July. Subsequently we have seen trading improvements in August and then again in September, suggesting consumer confidence is improving slightly,” Saltzman said.
After the reporting and six weeks to end October 14, the group said its revenue grew by 10.3 percent with comparable store revenue by 3.3 percent.
De Bruyn added that Clicks and Dis-Chem had the potential to gain more ground as the retailers increase their market share in the future.