South African pharmacy group Dis-Chem to add more stores, enter Botswana
* Pharmacy group to open 20 stores in FY19
* Expanding into convenience store model
* First store in Botswana
* FY Adjusted HEPS up 13.7 pct
(Adds details on new stores, shares, analyst comment)
By Nqobile Dludla
JOHANNESBURG, May 4 (Reuters) - South African drugstore
chain Dis-Chem Pharmacies plans to add more retail
outlets, 10 of which will be convenience stores, as it looks to
increase its market share after reporting a 13.7 percent
increase in full-year adjusted earnings.
In response to fewer shoppers visiting malls, Dis-Chem,
which made its debut on the Johannesburg stock exchange in 2016,
has developed various store sizes ranging down to 150 square
metres compared to its usual 1,000 square metre plus stores.
"There's definitely a change in the retail landscape. We're
seeing more opportunities that present themselves to ourselves
around 400 to 100 square metre space," Chief Financial Officer
Rui Morais said in the group's results conference call.
"So we need to cater for that in order to grow our store
base beyond 200 (stores by 2023)."
Dis-Chem plans 20 new stores in the 2019 financial year,
eight of which will be convenience stores and two smaller
outlets in residential areas under The Local Choice (TLC) brand.
The firm, which also has presence in Namibia, will enter
Botswana for the first time with its planned first store there.
Morais said it was in talks with a further seven independent
pharmacies for minority partnerships under the TLC brand.
Co-founded in 1978 by group Chief Executive Ivan Saltzman,
Dis-Chem competes with larger health and beauty retail rival
Clicks Group and retailers Shoprite and Pick n
Pay, which also sell medicines.
Adjusted headline earnings per share, which strips out
certain one-off items and is the main profit measure in South
Africa, increased to 78.7 cents per share from 69.2 cents per
share in the prior year, while adjusted headline earnings rose
19.7 percent to 677 million rand ($53.68 million).
Group turnover increased to 19.6 billion rand from 17.3
billion rand in the prior year, supported by a growing store
base and tight cost controls, while operating profit was flat at
1.1 billion rand.
At 1147 GMT, its shares were off 8.76 percent at 32.20 rand.
"The earnings performance was lower than what we were
expecting," Avior Capital Markets' Private Client Manager, Yusuf
Moola said in a note. Avior had expected a 35 percent rise in
adjusted headline earnings.
While the consumer market is expected to remain constrained
despite improving sentiment, Dis-Chem expects the resilient
markets in which it operates to offer some protection against
the weak environment.
($1 = 12.6126 rand)
(Additional reporting by Nomvelo Chalumbira; Editing by Keith
First Published: 2018-05-04 09:06:00
Updated 2018-05-04 14:33:25
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