Dis-Chem Pharmacies Reports Strong Revenue Growth in Trading Update

  • Dis-Chem Pharmacies reports 12.2% revenue growth, showcasing resilience and effectiveness in navigating market challenges.
  • Retail segment sees significant growth with 11.2% revenue increase, fueled by strong sales in Personal Care and Beauty categories.
  • Wholesale revenue surges by 20.0%, driven by increased sales to independent pharmacies and robust support from The Local Choice franchise.
Published by
Lethabo Ntsoane

Dis-Chem Pharmacies Limited has announced a robust trading update for the period from 1 September 2023 to 28 January 2024. The update showcases significant growth in both retail and wholesale segments, indicating a positive trajectory for the company.

Group Revenue Surges by 12.2%

Dis-Chem recorded a remarkable 12.2% increase in group revenue compared to the corresponding period in the prior year. This growth underscores the company’s resilience and effectiveness in navigating market challenges while capitalizing on emerging opportunities.

Retail Segment Flourishes

The retail division of Dis-Chem experienced noteworthy growth, with retail revenue up by 11.2%. Notably, like-for-like retail revenue saw a substantial increase of 8.2%, indicating strong organic growth within existing stores. Selling price inflation averaged 6.8%, contributing to the overall revenue boost.

The company maintained its position as South Africa’s largest retail pharmacy group by dispensary market share. Particularly, sales in the Personal Care, Beauty, and Baby categories surged, reflecting consumer confidence in Dis-Chem’s offerings. The expansion of the store base to 325 retail outlets, including both Dis-Chem Pharmacy and Dis-Chem Baby City stores, further solidifies the company’s market presence.

Wholesale Revenue Demonstrates Resilience

Dis-Chem’s wholesale segment showcased resilience and strength during the reporting period. Wholesale revenue increased by 11.0%, with sales to own retail stores growing by 9.4%. However, the most notable growth was seen in external customer revenue, which surged by an impressive 20.0%.

A significant driver of this growth was the 24.8% increase in external wholesale revenue from sales to independent pharmacies. This surge was attributed to the acquisition of new customers and enhanced support from existing ones. Additionally, The Local Choice (TLC) franchise demonstrated robust growth, with revenue increasing by 14.5%. The milestone achievement of 200 TLC franchise stores further underscores Dis-Chem’s successful expansion strategy.

Outlook and Strategic Initiatives

Chief Executive Rui Morais reiterated the company’s commitment to its strategic growth drivers announced in November 2023. These initiatives aim to deliver enhanced shareholder returns over the long term. Morais expressed confidence that the steps taken thus far have begun unlocking anticipated benefits, with momentum expected to accelerate into the fiscal year 2025.

Upcoming Release

Dis-Chem will release its results for the year ended 29 February 2024 on SENS on Friday, 31 May 2024, at around 7:05 am. Investors and stakeholders eagerly await these results, which are expected to provide further insight into the company’s financial performance and strategic direction.

Conclusion

The trading update from Dis-Chem Pharmacies Limited paints a positive picture of the company’s performance, with strong revenue growth across its retail and wholesale segments. As the company continues to execute its strategic initiatives and expand its market presence, it remains well-positioned for sustained success in the dynamic South African retail landscape.

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Lethabo Ntsoane

Lethabo Ntsoane holds a Bachelors Degree in Accounting from the University of South Africa. He is a Financial Product commentator at Rateweb. He is an expect financial product analyst with years of experience in reviewing products and offering commentary. Lethabo majors in financial news, reviews and financial tips. He can be contacted: Email: lethabo@rateweb.co.za Twitter: @NtsoaneLethabo