Dis-Chem in robust health as sales jump

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Dis-Chem in robust health as sales jump

Published Date: 2017-10-23 | Source: Stephen Gunnion | Author: Stephen Gunnion

Dis-Chem in robust health as sales jump

The group plans to double its retail outlets from 106 when it listed

Dis-Chem has opened 19 new stores since listing on the JSE last year - and ten since February. Its wholesale arm, CJ Distribution, has also expanded its facilities in Cape Town, adding close to 16 000m², which it says will support growth in its retail and wholesale business over the next three to five years, while growing its share of the market.

This growth has resulted in a 13.3% rise in turnover to R9.6 billion for the six months to end August. Retail turnover jumped 15% from the comparative period, with same-store sales rising by 8.6%. It raised its prices by an average 4%. Gross profit increased by 17.8% to R2.4 billion and its margin improved by 100 basis points to 24.7% as it negotiated better terms with its suppliers. Bad news for them, but good for Dis-Chem. Earnings and headline earnings per share rose 38% to 46.8c and it's paying a dividend of 18.73%, which amounts to 40% of adjusted headline earnings.

Related article: Dis-Chem rallies as it prescribes a sharp rise in first-half profit

"From the increased wholesale space CJ Distribution will be focusing on increasing its current market share by continuing to service Dis-Chem, increasing supply to a greater number of The Local Choice franchisees and serving a greater number of independent pharmacies," the group said.

Although Dis-Chem says the weak consumer environment is likely to continue, the second half of its financial year has kicked off with a 13% rise in turnover for the six weeks to mid-October. It says it's focused on adding more retail stores to its base and growing its share of the market.

The shares jumped 7.6% on October 20 when it flagged the rise in earnings in a trading statement. They ended marginally higher at R32.77 on Friday.



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