Dis-Chem down almost 4% on full-year results

JSE-listed retail pharmacy group Dis-Chem has declared a final dividend of 18.45 cents per share for the full-year ended February 2023, an 8.7% decline from the previous period, as the group reports greater spending on diesel and higher retail costs.

Informing investors of its performance for the period, Dis-Chem on Friday said it had spent 15.8% more on retail expenses than in the 2022 period.

This increase was driven by investment in new stores and acquisitions and a rise in employee, and IT costs, which included the rollout of new point-of-sale systems.

At the wholesale level, expenses grew by 12.2%, driven mainly by a 56% increase in diesel costs. However, at the group level, Dis-Chem’s diesel expenses were 65% higher, totalling R91 million to mitigate load shedding during this period.

Despite this expense, the retailer – like many of its sector peers – believes a tough time lies ahead for consumers and investors as it expects operational costs driven by rolling power cuts to eat away at earnings and continue to squeeze consumers.

“While the group has taken the necessary measures to minimise the operational impact of load shedding, the unavoidable increase in operational costs will continue to impact earnings,” Dis-Chem said.

Read: Dis-Chem spends R91m on diesel

Market reaction

Dis-Chem’s share price declined 3.68% on Friday to a one-year low of R23.66 around midday, registering a 28.9% drop over the last year.

Key metrics

Despite the rise in costs and the lower dividend reported for the period, Dis-Chem announced a 7.4% rise in group revenue to R32.7 billion, supported by a 6.5% rise in retail revenue and a 10.4% increase in wholesale revenue.

Headline earnings per share (Heps) strengthened by 17.4% to 116.5 cents, while earnings per share (Eps) increased by 17.2% to 116.3 cents.

Dis-Chem footprint now includes 258 retail pharmacy stores and 54 retail baby stores with 13 pharmacy stores and eight baby stores opened during the period.

Read:

Ivan Saltzman to leave as Dis-Chem CEO in June