This past year will be remembered as a period that irrevocably changed the way we live, work and trade. Shopping behaviours have been altered, and emerging trends are changing the retail landscape.
Ivan Leon Saltzman
These changes and adjustments have become critical for Dis-Chem, not only to ensure continued relevance, but to lessen the impact on the health and wellness of millions of people in South Africa. We have enhanced our focus on aligning management and all operations to a future that takes cognisance of the devastation that the pandemic has brought.
Driven by our values of excellence, customer service, doing the right thing and leveraging our entrepreneurial spirit, the Dis-Chem team responded with urgency and has shown tremendous agility in combating the pandemic and its devastating effects. This has been additionally impressive considering the exceptionally tough current economic environment.
Despite restricted trading conditions over the past year, we have remained committed to organic and acquisitive growth. We largely maintained our capital investment programme and opened 25 new retail stores in the period. This included 22 new stores and three Mediclinic stores, and we acquired two new pharmacies during the year. The Dis-Chem property footprint now sits at 194 stores. The Group’s total capex, incorporating expansion and maintenance expenditures, rose 10.4% to R401 million – which equates
to 16 500m2 of new Dis-Chem floor space – as we strive to maintain the momentum of being the destination of choice for health, beauty and other personal needs.
It is also fortunate that our online strategy was ideally positioned prior to the onset of COVID-19. The investment in online over the past five years has supported increased volumes, resulting in a step change in our online revenue, the growth of which exceeded 260%. This was achieved largely as a result of our key digital platforms being ready and well-suited to serve the stay-at-home and out-of-office trend that has rapidly emerged.
Overall Group revenue was 9.6% up at R26.3 billion, while operating profit rose 1.4% to R1.3 billion. The new stores contributed R491 million to revenue, while Baby City contributed R128 million to revenues in January and February 2021.
Dis-Chem’s retail unit’s revenue was 7.6% higher, with its operating profit down on last year at R1.2 billion, which is commendable considering the environment. The wholesale segment’s performance continued to improve, reporting a revenue increase of 16.4% to R19.3 billion and an operating profit of R65 million following a loss declared last year. Wholesale revenue to our own retail stores remains the largest contributor to this segments’ sales, while external revenue to independent pharmacies and The Local Choice (TLC) franchises grew by 27.7% and 37.1%, respectively, over the corresponding period.
Group expenses were fairly well maintained at R6.6 billion. Our determination to ensure continued employee health, protection and wellness resulted in COVD-19 related costs of R56.7 million, spent largely on vouchers and donations to assist employees, as well as on PPE, screening and testing.
Earnings per share (EPS) and headline earnings per share (HEPS) both increased by 11.8% at 77.8 cents.