Dis-Chem Pharmacies: Pills and thrills and bellyaches

Business

Dis-Chem Pharmacies: Pills and thrills and bellyaches

Strike was a R76m blow to Dis-Chem but it obscured how well the group performed in the past 12 months

Larry Claasen


Health and beauty retailer Dis-Chem Pharmacies had a difficult 12 months, as a nearly five-month long strike shaved up to R76.4m off its profits in the year to end-February.
The strike, which started in November, affected operations at three of its four distribution centres. It involved 2,300 of its 15,000 staff who were affiliated to the National Union of Public Service and Allied Workers.
The group’s labour issues forced it to relocate some of its staff, saw it lose sales and added to its security costs.
Despite the length of the strike, none of the union’s demands were met. These included a minimum wage of R12,500, and an annual increase of 12.5% guaranteed for the next three years.
The strike was a blow to Dis-Chem but it also obscured how well the group had performed for the period. Although the labour action cost it R76.4m, which equated to about 10% of its net profit of R765m for the period, net profit was still up 9.5% on the corresponding period’s R698m.
If the cost of the strike is stripped out, Dis-Chem somehow still managed to push up earnings by a decent amount in a market where  most other retailers were feeling the pain of a slow economy.
This is a notable achievement considering the difficulty the sector is in. While the outlook for retailers remains murky, Dis-Chem is still getting customers through its doors.

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