Dis-Chem to roll out new stores as it reports profit

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JOHANNESBURG, May 4 (Reuters) – South African drugstore chain Dis-Chem Pharmacies will add more retail stores and scale, as it looks to increase its market share after reporting a 13.7 percent increase in full-year adjusted earnings.

The firm, which made its debut on the Johannesburg stock exchange in 2016, is on an expansion drive as it looks to take on larger health and beauty retail rival Clicks Group and retailers Shoprite and Pick n Pay, which also sell medicines.

In the year to end Feb.28 it added 21 stores, bringing the total to 129.

“The group remains focussed on adding retail stores and scale to its base,” it said in a statement. Dis-Chem aims to increase its base to 200 stores by 2023.

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.

Group turnover increased to 19.6 billion rand ($1.56 billion) from 17.3 billion rand in the prior year, supported by a growing store base and tight cost controls, while retail turnover rose 15 percent.

“Although consumer spend remains constrained, we continue to see growth opportunities across all channels of the market in which we operate,” Chief Executive Ivan Saltzman said in a statement.

“Store growth and efficiencies, trading densities and tight cost controls remain at the forefront of our short and medium-term strategy to ensure sustainable growth.”

South African shoppers are feeling the impact of low growth in disposable income, little job creation and tight credit conditions but promotional offers and competitive pricing from some retailers have offered some relief, boosting sales.

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 = 12.5800 rand) (Reporting by Nomvelo Chalumbira and Nqobile Dludla; Editing by Subhranshu Sahu/Keith Weir)