Dis-Chem exceeds R30bn revenue mark
Pharmaceutical retailer Dis-Chem saw improved earnings for the year until February. Backed by strong online sales and its acquisition strategy, group headline earnings per share were almost up by 30 per cent and revenue exceeded $30 billion. Joining CNBC Africa for more is Rui Moraish, Chief Financial Officer at Dis-Chem.
Mon, 23 May 2022 16:09:28 GMT
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AI Generated Summary
- Dis-Chem surpasses R30 billion revenue mark, driven by normalization of consumer engagement and strategic acquisitions
- Return to higher margin categories, such as beauty products, boosts company's margins post-COVID
- Focus on health insurance market and cost-saving measures to enhance affordability and access to healthcare
Pharmaceutical retailer Dis-Chem has exceeded the R30 billion revenue mark for the first time, showing an impressive growth of almost 16%. This achievement was driven by a combination of factors, including the normalization of consumer engagement, the contribution of Baby City to the company's numbers, and the addition of Medicare, an independent pharmacy group of 50 pharmacies. Rui Moraish, Chief Financial Officer at Dis-Chem, explained that these strategic levers propelled the company to reach this significant milestone.
One notable driver of this growth was the return to higher margin categories, particularly in the beauty segment. During the COVID-19 pandemic, there was a shift in consumer behavior towards essential products, impacting the sales of beauty products. As the post-COVID environment stabilizes, there has been a recovery in the beauty category, leading to improved margins for Dis-Chem.
The company also observed a shift in consumer trends post-COVID, with more frequent store visits and a normalization of consumer baskets. Moraish highlighted the importance of health consciousness among consumers, noting an increased focus on self-medication and healthcare-related products. This shift has underscored the significance of health in individual spending patterns and highlighted the role of pharmacies in promoting wellness.
In response to the challenges posed by the COVID-19 pandemic, Dis-Chem has implemented cost-saving measures to ensure cost efficiency for patients. The company, known for its value-oriented brand, has focused on optimizing dispensing pricing and expanding into the health insurance market. By offering affordable health insurance options, Dis-Chem aims to provide greater access to healthcare for individuals who cannot afford traditional medical aid.
Looking ahead, Dis-Chem plans to capitalize on the growth potential of the health insurance sector, leveraging its product offerings and addressing the low market penetration in South Africa. While the short-term impact of these initiatives may be limited, the company anticipates that health insurance could become a significant contributor to its overall business in the long run.
Amidst global and local inflationary pressures and increasing interest rates, Dis-Chem remains committed to delivering value to consumers. The company emphasizes its focus on affordability and value creation across its product and service offerings. By collaborating with schemes and continuing to provide cost-effective healthcare solutions, Dis-Chem aims to meet the evolving needs of price-conscious consumers.
Regarding future acquisitions, Dis-Chem has recently completed acquisitions totaling one billion rands over the past two years. Moraish indicated that the company's current focus is on integrating these acquisitions into its business operations and maximizing their potential returns. While there are no immediate plans for new acquisitions, Dis-Chem remains open to opportunities that align with its strategic objectives and growth trajectory.
In conclusion, Dis-Chem's impressive financial performance and strategic initiatives signal a promising outlook for the company. With a strong emphasis on value, affordability, and expansion into new market segments, Dis-Chem is poised for continued growth and success in the pharmaceutical retail industry.