Dis-Chem defers dividend as it considers post Covid-19 environment
Sales surged in March, but the pharmacy group is concerned about the outlook for SA’s economy
Pharmacy group Dis-Chem has deferred a decision on its final dividend due to uncertainty over its future trading environment, even as it reported a surge in sales in March as SA consumers stocked up ahead of the lockdown.
The group said sales in March jumped 45.6%, however, revenue fell about 20% due to its inability to sell non-essential items during SA’s level 5 lockdown.
Dis-Chem had paid about R115m in final dividends for its 2019 year. The group said on Monday it wanted to better understand trading conditions in the months ahead, and consider funding options for its recently announced R430m acquisition of Baby City.
The group said revenue grew 12% to R24bn in its year to end-February 2020, with the group benefiting from an almost 25% rise in wholesale revenue due to the contribution from Quenets, which the group acquired in November 2018.
Profit after tax fell 15.9% to R628.2m, partially due to the group having changed its accounting policy regarding the 13th cheques, which resulted in a lower bonus payment in the previous year.
The group is planning to continue its expansion, and intends to add 21 stores in its 2021 year; it had 170 stores at the end of February.
“The group expects that the consumer will continue to remain constrained and the full extent of the impact of Covid-19 is still unknown,” the pharmacy group said. “The ultimate impact on trade in the 2021 financial year is currently unknown, as it will depend heavily on the duration of the lockdown levels and the normalisation of retail trade.”