Fuel prices put pressure on customers, but Dis-Chem shares rise on increase in sales
Strong growth to continue
HEALTH and beauty care retailer Dis-Chem Pharmacies share price leapt by more than 7 percent on the JSE after the group reported that its sales rose 11.1 percent to R7 billion for the four months to end June. Dis-Chem reported that its online sales increased to R21 million, with Click and Collect at R3.5m and Pay on Collection at R1.6m.
“Even though this is still a small part of our business, we have invested heavily in it and continue to see strong growth,” the group said.
Dis-Chem said its overall sales increased 11.1 percent to R6.4bn, with like-for-like sales at 4.5 percent, which was negatively impacted by the 1.26 percent single exit price (SEP) increase effective from March 1.
The group said the SEP was prescribed by the Department of Health and impacted approximately a third of its retail sales.
Total dispensary sales growth was 8.2 percent, but it was lagging the average frontshop sales growth of 12.2 percent. “In the absence of an additional SEP increase during the remainder of the financial period we expect dispensary sales to continue to lag our front-shop categories, personal care and beauty, healthcare and nutrition, and baby care, all of which are reporting doubledigit growth,” the group said.
Chief executive Ivan Saltzman said April and May retail sales, however, wobbled as the continuing increase in fuel prices along with the 1 percentage point increase in the value added tax rate put pressure on consumers.
“Our continued marketshare gains in all key categories confirm the success and importance of our everyday low price strategy and the availability of choice for our customers,” Saltzman said. “Our superior trading densities, high average basket size and spend by our Benefits Programme members further points to the loyalty that our brand enjoys in this market.”
In the financial year 2018 Dis-Chem added 21 new stores, which contributed R435m to turnover in the four-month period under review.
During the four-month period in review the group added six new stores, which added R79m to retail turnover. “With at least 14 store openings planned until February 2019, we reiterate our guidance to end the full year with a minimum of 149 stores,” the group said.
Dis-Chem said wholesale sales grew by 11.8 percent to R4.8bn during the period.
The group said its earnings guidance for financial year 2019 showed that full-year earnings per share (Eps) would increase between 16 percent and 20 percent to between 92.3 cents and 98.7c for the 12 months to end February 2018.
It said half-year Eps would be between 50.6c and 52.9c, an increase of between 8.1 percent and 13 percent compared to the Eps of 46.8c for the six months to end August 2017. The group is expected to release its halfyear earnings in October.
Dis-Chem shares closed 7.07 percent higher on the JSE yesterday at R27.73.