Strike adds to Dis-Chem’s Christmas woes
Excluding new stores, the pharmacy chain’s December sales fell as it battled with supply disruptions
Dis-Chem’s Christmas sales have been hurt by a strike, the pharmacy chain warned in a trading update on Thursday morning.
“The current ongoing industrial action heavily impacted December trade and continues to affect the group,” CEO Ivan Saltzman said in the statement.
Dis-Chem expects earnings for its financial year to end-February to be about 20% higher, which is below its earlier target.
“Since the labour unrest is still ongoing, the full quantum of the impact is still unknown, but to date loss of income and additional costs directly linked to the industrial action have amounted to approximately R50m,” Dis-Chem said in the statement.
Excluding new stores, Dis-Chem’s retail revenue declined by 2.5% in December.
Including new stores, it grew its Christmas sales by 6.2%, “which was well below our expectations”, Saltzman said.
“Although contingency plans were in place to ensure minimal disruption at our retail stores, we experienced lost opportunity sales in December primarily due to stock supply challenges. This was further supported by the fact that we reported our lowest market share gains of the financial year in the December month.”
For the 22 weeks to end February 2, Dis-Chem grew its retail sales by 10% to R8.6bn and its wholesale sales by 8.4% to R6bn. The group’s overall sales grew 10.7% to R9.4bn from the matching period in its 2018 financial year.
Saltzman cited the group’s MicroPopz! plastic toy promotional campaign as a highlight.
“Pleasingly, the MicroPopz! Campaign saw 500,000 new customers walking through our doors and a high conversion rate of these customers into loyalty members.”