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Dis-Chem talks up expansion plans and life insurance launch

Staff Writer
Estimated reading time: 2 minutes

Dis-Chem Pharmacies Limited has reported robust financial results for the six months ending 31 August 2024, alongside ambitious expansion plans.

The group’s revenue increased by 9.6% to R19.6 billion, compared to R17.9 billion in the same period last year. Earnings per share rose by 15.6% to 67.4 cents, while headline earnings per share increased by 16.3% to 67.7 cents.

The company declared a dividend of 26.98 cents per share, up 16.1% from the previous year.

During the first half of the financial year, Dis-Chem achieved significant growth across various segments.

Retail revenue grew by 7.1% to R16.7 billion, with comparable pharmacy store revenue increasing by 4.8%. The group opened a net six new retail pharmacy stores, bringing the total to 274, along with 53 retail baby stores.

Wholesale revenue saw a 10.1% rise to R15.1 billion, driven by a 6.8% increase in sales to Dis-Chem’s own retail stores and a 26.6% growth in external revenue to independent pharmacies and The Local Choice (TLC) franchises.

Dis-Chem’s management has been focused on navigating a challenging trading environment while capitalizing on increased tenant activity. The group made significant progress in reducing portfolio vacancies, particularly in its commercial properties.

Over 9,000 square meters of commercial office space were leased, boosting the commercial office occupancy rate by 616 basis points.

The group’s strategic focus includes several key areas aimed at delivering sustainable shareholder returns. These include expanding property space, increasing total income growth, maintaining cost control, improving working capital, and expanding wholesale market share.

Dis-Chem also plans to launch Dis-Chem Life in Q1 2025, supported by the evolution of its extraRewards programme to drive customer engagement. It follows the acquisition of OneSpark in June, where the retailer bought a 50% stake in the insurer for R155.9 million.

Dis-Chem invested R330 million in capital expenditure, with R194 million allocated to expansion, including new stores and the Longmeadow warehouse, and R136 million for maintaining existing retail and wholesale networks.

The group’s balance sheet remains strong, with a loan-to-value ratio of 23.93% before the implementation of the Emira transaction and the disposal of 100 Fairways Close.

Looking ahead, Dis-Chem expects consumer spending to remain constrained due to the current economic climate. However, the group’s focus on cost containment and customer value creation positions it well for future success.

Dis-Chem aims to achieve a 10% improvement in inventory days over the next 18 months and continue expanding its wholesale market share by transitioning independent pharmacies into TLC franchise stores.

The group pointed to a current space pipeline of 107,000m² with the property team continually growing and converting pipeline towards achieving the 3-year target of 137,000 m².

The group’s integrated health ecosystem, digital re-platforming, and leveraging analytics to enhance shopper and patient value are expected to drive long-term growth.

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