Dis-Chem continues to conquer the market: Pharmacy is the key

Dis-Chem continues to conquer the market: Pharmacy is the key

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It looks like JSE listed retail pharmacy group, Dis-Chem, is on course to achieve its ambitious growth target of 200 stores by 2022/23 financial year.

Dischem announced this five year target last year when its store count was at 112. The group added 21 stores during the financial year ended February 2018 bringing the total number of stores to 129 in a wave that is benefiting from the health and welness craze of the post modern era.

Dis-Chem is on record that “its strategy is to use its dispensary-led footfall to generate revenue from its front shop. The destination format drives superior trading densities and customer loyalty. The group combines defensiveness- being a non-discretionary pharmacy- with high growth- expansion opportunities.”

Dis-Chem CEO, Ivan Saltzman,  has expressed confidence that the group can reach reach 200 stores by 2022/23. This growth could be partly realised through alternative store formats after the successful opening of a 670m² trading store. The alternative stores will be stores of between 330m² and 600m², located mainly in the convenience-focused centres.

Dischem also continues to grow its profitability. The 2017/18 financial results show 12% growth in earnings. This was achieved from 13.3% increase in group turnover to R19.6 billion

Management says group turnover growth was as a result of maturing store base as well as the addition of 21 stores. “All core categories experienced strong volume growth as a result of maturing and increasing space. As a result the Group continues to gain market share in the core categories.”

Management noted that CJ Distribution – representative of the wholesale segment – increased turnover by 19.6% as it reached 79% of total stock supply into the Group’s retail stores.
“Wholesale space, which now totals 80 123 m2 was increased with the addition of the Cape Town space (15 693m2) which was completed at the end of July 2017. Management believe that the wholesale space is now fully invested and will be able to accommodate retail and wholesale strategies for the next three to five years.
“Post year-end CJ Distribution has acquired – pending competition commission approval – a regional wholesaler in
Cape Town. This acquisition adds scale to the wholesale operations and provides opportunities to unlock retail and
wholesale synergies.

Management said it expects that the consumer will continue to remain constrained despite improving sentiment. “As was the case previously, the resilient markets in which the Group operates will offer protection against the weak environment; the Group is well positioned to benefit from additional consumer disposable income.”

news@ujuh.co.za

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