Dis-Chem reports double-digit sales growth

Dis-Chem Pharmacies says sales grew 13.5% to R9.9bn in the first five months of its 2020 financial year, thanks partly to better wholesale revenues.

“The group delivered a strong revenue performance in the five months to 31 July in a tough economic environment with increased competition and a constrained consumer,” CEO Ivan Saltzman said.

“I am extremely satisfied with the rationalisation of stock levels post the strike and single-exit-price buy-in, as we focus on improving free cash flow ensuring we require less net working capital investment, which will better enable us to fund future growth strategies,” Saltzman said.

Retail revenue increased by 12% to R9bn in the five-month period, with comparable sales growth of 5.3% boosted by the 3.8% single-exit-price increase that came into effect in March 2019.

Trading volumes were slightly up, while retail sales price inflation was at 2.5%. The group added nine new stores in the five-month period “and is on track to add another 13 stores before year-end”.

The wholesale business, which supplies products to Dis-Chem stores and independent operators, grew revenue by 15.3% to R6.8bn.

However, Dis-Chem said earnings in the six months to end-August would be affected by various once-offs, including costs linked to the recent employee strike.

“With the strike and warehouse decentralisation concluded, the group has and continues to focus on reducing and rationalising its stock holding to improve free cash flow generation and to ensure that it meets its medium-term net working capital targets,” it said.

hedleyn@businesslive.co.za