Business

Major blow for Dis-Chem

Staff Writer

 ·29 Oct 2026

Healthcare and pharmacy group Dis-Chem has suffered a 13% decline in headline earnings in the first half of the year, as it ramped up investment into digital.

In a late-day posting on SENS, the group reported headline earnings at R550.1 million for the six months ended August 2026, down 13% from R632.5 million in the same period last year.

Basic earnings per share (EPS) and basic headline earnings per share (HEPS) were 64.1 cents and 64.3 cents per share, respectively, a decrease of 13.3% and 12.8%.

The pressure on earnings came from various points, including higher capital expenditure costs related to its new “digital and data innovation engine”, X, bigly labs, where associated investment costs doubled.

It also experienced pressure on its wholesale retail margins, while the introduction and rapid growth of its Better Rewards loyalty programme caused temporary price deflation in retail sales.

Net financing costs also rose by 11.2% to fund ongoing capital expenditure and network expansion.

Group revenue was up 8.0% to R23 billion for the period, with an 8.2% increase in retail revenue to R19.6 billion. Comparable pharmacy store revenue growth was at 3.4%.

The company opened 14 retail pharmacy stores over the period, including two Store of the Future format stores at Melrose Arch and Irene Village.

There are now 328 retail pharmacy stores and 36 retail baby stores in the stable as of 31 August 2026.

Wholesale revenue grew by 9.6% to R18.4 billion, with this revenue to its own retail stores still the biggest
contributor, up 10.3%.

External revenue to independent pharmacies and The Local Choice (TLC) franchises grew by 7.0% over the comparable period.

Dis-Chem noted that its wholesale business now services 1,690 independently owned pharmacies, representing approximately 89% of the independently owned pharmacy market.

Group expenses increased 12.1%.

Retail expenses grew 13.7% as the Group invested in new stores and X, bigly labs, with retail employment costs, 53.0% of the total, rising 12.8%.

“X, bigly labs has driven a shift towards data-led commercial decisioning,” it said.

“The cost investment in X, bigly labs doubled over the corresponding period, during the start-up phase of the unit.”

Finances should flatten out

Dis-Chem said that, as X, bigly labs nears its established state, it will continue to operate under the cost discipline philosophy of the Group.

It declared a gross interim dividend of 25.62 cents per share, 12.9% lower than the prior period and based on 40% of headline earnings.

Looking ahead, the group said that the seven weeks from 1 September to 19 October 2026 saw group revenue grow 7.9% year-on-year.

Retail revenue rose 7.2%, supported by five new pharmacy stores, and external wholesale revenue grew 12.4%.

It said its strategic priorities for FY2027 include the opening of 30 retail pharmacy stores, 19 of which are already trading.

Notably, all new stores will adopt the Store of the Future format and the Health Hub, while existing stores are being prioritised for revamps based on their potential to drive revenue and earnings growth.

“X, bigly labs houses the ambition for the Group’s digital ambitions, and since its launch, R240 million has been deployed to re-platform Dis-Chem’s digital estate and the consequential transformation of the operational business beneath it,” it said.

“This capital investment in e-commerce has resulted in the re–engineering of the core commerce platform and the supporting retail capabilities, ensuring best-in-class cataloguing, pricing, fulfilment and order management.”

Relative to the corresponding prior year period, the group said it anticipates a more even distribution of earnings across 1H2027 and 2H2027 due to the higher invested cost base for X, bigly labs in 2H2026.

This should contribute to a stronger full-year earnings performance, it said.