Dis-Chem feels the pain as it rolls out ‘Stores of the Future’

Despite strong 8% topline growth, Dis-Chem’s bottom line suffered in the first half of its 2027 financial year.

The group reported a 13.3% decline in earnings per share, a 12.8% drop in headline earnings per share, and a 12% fall in profit.

This was revealed in Dis-Chem’s results for the six months through August 2026, which were released on Thursday, 29 October.

The group explained that its revamped Better Rewards loyalty programme supported topline growth, with revenue up 8% to R22.97 billion.

Dis-Chem also recorded substantial market share gains, particularly in the healthcare and medical (45.1%) and baby care (10.8%) segments.

However, the group’s bottom line came under pressure, with interim profit down 12% to R580.58 million. 

CEO Rui Morais attributed this to earnings distribution, explaining at a media roundtable on Thursday that the group historically generated the majority of its earnings in the first half of its financial year.

For example, in the 2026 financial year, H1 accounted for 64% of earnings, while H2 accounted for the remaining 36%.

Now, the group is aiming to distribute its earnings more evenly between the two halves, with it expecting the second half of 2027 to be more in line with the first half. 

“We still expect a very strong year, just supported by a stronger second half,” Morais said, adding that the group is protecting its total income margin.

The group’s total income margin rose to 31.4%, compared to 31.1% in the first half of the 2026 financial year.

“The revenue growth, market share gains, and improved retail total income margin highlight the sustainability of the Better Rewards program,” Dis-Chem said in its results. 

“The Better Rewards programme serves the dual purpose of supporting business growth while offering customers value at the till as they remain constrained due to the current economic climate.”

Operationally, Dis-Chem continued to increase its retail footprint, opening 14 new retail pharmacy stores in the six-month period.

This includes two of Dis-Chem’s “Store of the Future” new format stores, which were launched earlier this year.

“Initial trading densities of both stores exceed comparable early-stage trading densities of original-format stores by 25%,” Dis-Chem said.

This, the group added, indicates faster maturation and higher trading densities at maturity, with improved working capital metrics.

Dis-Chem plans to open 16 more stores in the 2027 financial year, all of which will use the new format. The group is also eyeing revamps for some of its retail stores.

A standout in Dis-Chem results was its Better Rewards loyalty programme, which passed R1.5 billion in value back to customers in the form of discounts over the period.

The programme’s customer base grew by 27% to 8.2 million members, having added 980,000 new members in six months.

Morais explained that the rewards programme saw Dis-Chem’s front-shop volume grow by 5.5%, higher than total market volume growth of 0.1%.

Better Rewards, the new store rollouts, and continued investment in Dis-Chem’s “innovation engine”, X, Bigly Labs, were the key drivers of the company’s rise in expenses.

Dis-Chem’s expenses grew by 13.1%, with retail expenses up 13.8%. 

The group’s capital expenditure rose to R712 million, with R492 million being expansionary expenditure for additional stores, the re-platforming of its digital estate, and IT enhancements.

On the back of these results, Dis-Chem declared an interim dividend of 25.62 cents per share, down 12.9% from H1 2026.