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- Dis-Chem's share price fell by 2% on Friday morning as the group announced a 17% profit fall.
- Revenue grew almost 10% in its half-year to end-August.
- But its margins were under pressure as it increased promotions and picked up its advertising spend.
- For more financial news, go to the News24 Business front page.
While pharmacy group Dis-Chem is growing revenue, profits are under pressure as it fights for market share in a tough economy.
Group revenue rose 9.4% to R17.9 billion in the six months to end August, the group announced on Friday, or just over 10% when excluding the effect of Covid-19 vaccines in the prior period.
But headline earnings fell about 17% to just under R500 million, with margins under pressure in personal care and beauty as the retailer picked up its promotional activity.
The group is also still feeling the effects of a boycott from some customers following a leaked internal memo, which announced a moratorium on hiring white people.
In March this year, Dis-Chem estimated that between 5% to 8% of its white, coloured and Asian chronic medicine clients ditched the group.
This put pressure on its performance in the second half of its prior year, which carried through into the first quarter of its current year, it said on Friday.
READ | Dis-Chem says some of its chronic customers may be returning after memo furore
"During the current financial year, the group was impacted by the base effects of the prior year's performance, which were distinctly different across the two halves of the year," CEO Rui Morais said during an investor presentation.
A more equal distribution is expected going forward, he said, with Dis-Chem anticipating a stronger end to financial year 2024, following higher revenue growth in the first two months of the second half of more than 12%.
Retail expenses grew by 11% over the comparable period, as the group invested in new stores and acquisitions.
Its employee costs also increased by almost 10%, with diesel costs to run generators, higher IT costs associated with the remaining rollout of the new point-of-sale system to stores, and increased advertising expenditure also contributing.
During the period, 10 retail pharmacy stores were opened or acquired, resulting in 268, as well as 54 retail baby stores.
Dis-Chem cut its interim dividend by 17% to 23.24c, resulting in a R200 million payout for a group valued at R21.5 billion on the JSE.
The group's shares were down just over 2% in morning trading on Friday and have fallen more than 23% in the past 12 months.
