Dis-chem reports sales boost as consumers pursue health

Pharmacy group Dis-chem says it reaped the benefits of consumers’ increased interest in preventing disease, reporting “remarkable growth” in the sale of vitamins and chronic drugs over the past few months.

In a trading update for the 22 weeks to February 2, the group said it had gained market share as consumers focused more on preventive health care, with group sales rising 12.1% to R11.6bn.

Traffic in busier shopping centres remained depressed due to Covid-19, the group said. A change in the sales mix has put pressure on profit margins, which remain below pre-pandemic levels.

Dis-chem targets mid-to-upper-income consumers, and has two operating segments — retail and wholesale — though it primarily sells to itself in the latter.

Retail revenue increased by 10.3% to R10.4bn to February 2, Dis-chem said, while wholesale revenue grew by 20% to R8.6bn.

Inter-group sales amounted to R7.37bn, and rose almost a fifth, while external sales grew 30.6%, which Dis-chem said was partially due to its growing distribution network.

Dis-chem had 182 stores at the end of August, and opened 10 new stores in the five or so months to February 2.

These were trading above expectations, the group said, which validated its selection of sites. Stores in convenience centres are still outperforming those in more crowded malls.

Dis-chem said its stores in malls posted a 0.6% fall in sales in the five months to February 2.

This is an improvement from the 8% fall in the previous five months.

“It is encouraging to see, and a testament to the Dis-chem brand’s destination status, the significant recovery in many of our older stores located in regional malls,” CEO Ivan Saltzman said.