Dis-Chem looks back on a good year and 108 stores
The company increased its stores by 11 to 108 in the year to end-February, charging that it was confident that the resilient markets in which it operated would buffer the weak consumer environment in South Africa.
“Despite the strong start to the new financial year it is expected that the weak consumer spending environment will continue in 2017 with the ongoing political uncertainty, low economic growth and increase in taxes constraining consumers,” the group said.
The results showed that the group's turnover rose 14.7 percent to R17.3 billion from the prior year, attributed to a maturing store base and the increase in the number of stores.
Retail turnover increased by 15.3 percent with like-for-like turnover increasing by 9.1 percent with product inflation estimated at 6.5 percent for the year. The wholesale business CJ Distribution reported impressive growth, with a 22.2 percent increase in turnover as compared to 2016. The group said CJ Distribution’s wholesale space also increased through the opening of the Durban warehouse and a Delmas warehouse.
It said the Cape Town warehouse was currently being completed with operations starting in the first quarter of the new financial year.
The group said it believed that the wholesale space was now fully invested in order to accommodate the retail and wholesale growth strategies over the next three to five years.
“From the increased wholesale space CJ Distribution will be focused on increasing its current market share of 25 percent by continuing to service Dis-Chem by increasing supply to a greater number of The Local Choice franchisees and serving a greater number of independent pharmacies,” the group said.
Operating profit increased by 24.3 percent to R1.1bn during the period, up from R906.68 million recorded in 2016, while retail margin increased by 0.4 percent and the wholesale margin increased by 0.1 percent. The group’s operating margin increased by 50 basis points to 6.5 percent.
The group reported R655m profits, up from R576m a year before. Net finance costs increased 1.5 times to R225m from the prior year due to a change in the capital structure of the group. The board declared a gross final cash dividend of 7.35cents per share from income reserves.
Dis-Chem shares dropped 2.48 percent on the JSE on Wednesday to close at R24.43.
BUSINESS REPORT ONLINE