Dis-Chem says lockdown accelerated its digital advance by five years

Dis-Chem Pharmacies on Tuesday (24 August) reported revenue growth of 16.3% to R13 billion for the 22 weeks ended 6 August 2021, amid the backdrop of Covid-19, vaccine rollout and July’s civil unrest and looting.

South Africa’s second-largest retail pharmacy chain said that despite the prevailing environment, retail revenue increased by 16% to R11.5 billion over the corresponding period, with comparable sales growth at 6.7%.

The group said it continued to experience a change in its sales and transaction gross margin mix due to altered consumer behaviour during the varying lockdown levels.

“The sales of lower margin Covid- related products, which are decreasing in price, increased disproportionately during and subsequent to the second and third waves of infection, resulting in a transactional margin growth lagging sales growth over the comparable period,” it said.

A normalisation of transactional gross margin mix and sales contribution is anticipated in the 2023 financial year, with a concomitant increase in the total income margin.

Dis-Chem said that since the initial lockdown, it has rapidly adapted to the e-commerce environment, with the unexpected benefit of accelerating its digital advance by as much as five years. Online sales saw growth of 14.4% over the comparable period which already included an increase of 345.9% over the 2019 comparable period.

“The quick deployment of an additional 44 e-commerce hubs and increased investment in the Group’s e-commerce platform enabled it to meet increased online demand. The most recent launch of Dis-Chem DeliverD, a one hour on-demand delivery service, has been trialled in 31 stores and has seen positive consumer uptake. This service is being rolled out to a further 30 stores within the next month.”

Dis-Chem said it will open its landmark 200th store in September. During the 12 months to 06 August 2021, eighteen Dis-Chem and three Baby City stores have been opened.

Wholesale continues to perform well with revenue increasing by 17% to R9.5 billion as the group’s independent and franchise customer bases continue to grow. Sales to its retail stores, which contribute 84% of wholesale revenue, grew by 16.6%. Sales to Independent Pharmacies increased by 10.1% and, to The Local Choice (TLC) franchisees, sales increased by 34.7%, it said.

The number of TLC franchisees as at 06 August increased to 132, compared to 108 at the end of the corresponding period, the group said.

Dis-Chem said that during the civil unrest and looting in July, three stores and one Baby City store were impacted with stock and assets stolen or damaged, amounting to approximately R40 million.

Numerous stores were closed in KwaZulu-Natal and Gauteng with the lost sales during this period estimated at approximately R70 million, resulting in a R15 million loss in total income, the group said.

“We continue to take market share in all categories and have delivered strong cash generation. It remains challenging that the full extent of the impact of Covid- 19 still unknown,” said CEO Ivan Saltzman.

Read: Dis-Chem launches same-day delivery service – these are the stores under trial

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Dis-Chem says lockdown accelerated its digital advance by five years