Dis-Chem plans to expand its network of pharmacies in 2021 and believes it can take advantage of lower rentals resulting from the rising number of vacancies in malls.
CFO Rui Morais said that while the economy was weak, health care had proven to be a “resilient” business.
Morais said landlords would battle with vacancies even after the lockdown lifted, giving it a “strengthened” position in negotiations over new store rental rates. There is concern that some cinemas and some restaurants will be hit hard by the lockdown and may never reopen after months of closure.
New Dis-Chem stores are planned to be smaller than the current big box store formats. During the year to February, it opened 18 stores and bought three independent pharmacies, bringing the total number of stores to 170.
Dis-Chem made headlines when it told landlords at the beginning of April that it would pay lower rent for the month based on lower trading levels.
Morais said trading in the first few days of lockdown from March 27 plummeted and it then told landlords it would to pay utility bills in full and pay rents based on trade levels.
It has now paid landlords an average of 83% of April’s full rent in line with the percentage of product lines it was allowed to sell. Some goods such as perfume and sports supplements were not permitted for sale.
“We assumed everyone would go down that route. Everyone went down that route,” said Morais.
Dis-Chem was down 1.44% to close at R19.86.