Dis-Chem lost R5.21 billion since no-whites letter

Dis-Chem has lost R5.21 billion in value since its CEO Ivan Saltzman’s letter, which placed a moratorium on employing or promoting white people at the retailer, became public.

Saltzman revealed to investors that many regular Dis-Chem dispensary customers withdrew their scripts after the memo banning hiring white employees was leaked.

It was not all bad. The Dis-Chem CEO said an analysis of customer data revealed that it also gained black chronic medication customers.

However, the number of clients lost following the moratorium on white employees exceeded the number of clients gained.

The moratorium’s impact was revealed as part of Dis-Chem’s trading update from 1 September 2022 to 5 February 2023.

It showed a significant decrease in revenue growth which slowed to the lowest level since Dis-Chem was listed in 2016.

Historically Dis-Chem’s average group revenue growth for this reporting period was 12.4%, significantly higher than the 8.7% over the last five months.

The reporting period overlaps with the negative news flow around Dis-Chem since Solidarity CEO Dirk Herman published the letter on 13 October.

There was widespread condemnation of the letter, with many calls for a boycott of the pharmacy chain.

Dis-Chem initially said it regretted the letter’s wording but not its intent, signalling that the moratorium on employing or promoting white people at the retailer remained in place.

However, after the company’s sales were affected and threats of legal action were raised by Solidarity’s legal team, Dis-Chem retracted its statement.

Since the news was released on 13 October Dis-Chem’s share price has fallen by 18.1%, translating to a market cap destruction of R5.21 billion.

Dis-Chem versus Clicks

To accurately assess the impact of the letter on Dis-Chem’s share price, Daily Investor tracked the performance of R100 invested into Dis-Chem and Clicks from 13 October – the day the letter was released.

The R100 invested in Clicks fell to R94.24, a 5.76% decline over the 4-month period. Dis-Chem, in comparison, returned only R81.5 converted – an 18.5% decline.

Many factors could have influenced the share price, but the impact of the “no-whites” letter was undoubtedly a significant contributor to Dis-Chem’s woes.


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