Dis-Chem says employee strike cost it more than R75m

Dis-Chem Pharmacies says a strike by employees that lasted nearly five months shaved up to R76.4m off its profits in the year to end-February.

“Unfortunately, the industrial action which began mid-November last year heavily impacted the group’s performance,” CEO Ivan Saltzman said in a statement.

“The demands by the union were unreasonable considering the economic climate and the nature of the industry in which we operate.”

The retailer said on Thursday its headline earnings in the year rose 7.4% to R734.7m. The strike resulted in direct costs of R50.4m, partly because of increased security and legal costs, and indirect costs of between R22.3m and R26m, Dis-Chem said.

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Group revenues grew 10% in the year to R21.4bn.

With the strike now over, the company is focused on developing “a productive employer-employee relationship, improving wholesale productivity levels and cost efficiency, as well as optimising the levels of stock-holding in the group, which the industrial action necessitated”.

“It is pleasing to continue to see market-share gains across all of our core categories,” Saltzman said.

Market-share gains were driven partly by the low prices and “aggressive promotional activity”.

The group declared a final dividend of 13.5c, from 12.8c previously.

Meanwhile, Dis-Chem said that in the 10 weeks to May 10 2019, group revenue grew by 12%.

Five stores had been added since the financial year-end and another 17 store openings were planned through to February 2020, it said.

hedleyn@businesslive.co.za