Dis-Chem lived up to demanding market expectations in its maiden year as a listed company, delivering a 30.8% rise in adjusted headline EPS (HEPS). But to justify its heady 36 p:e, the health and beauty retailer will have to keep on producing more of the same. Strongly in Dis-Chem’s favour is its highly resilient drugstore model, in which the front-store profit engine is supported by a back-of-store customer-drawing pharmacy. It is the same model followed by Dis-Chem’s larger arch-rival, Clicks, which is now trading on a 27.6 p:e. At the retail sales level Dis-Chem lags behind Clicks by a big margin. In its year to February, Dis-Chem reported retail sales of R15.6bn, a retail operating profit of R1.1bn and an operating margin of 7%. In its six months to February, Clicks’ retail sales stood at R9.24bn (annualised R18.5bn), retail operating profit at R700m (R1.4bn annualised) and operating margin at 7.6%. Clicks generates roughly the same level of retail sales and operating profit in ...

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