Sigma chief executive Vikesh Ramsunder says it has not lost any pharmacy customers since announcing an $8.8 billion merger Chemist Warehouse, which has recorded a near 30 per cent lift in first-half profit.
In tabling Sigma’s results in the year to the end of January, Mr Ramsunder said the company took time in December and January to engage with its customer base to answer any questions.
“Initially when the proposed merger was announced, we had several questions and concerns from our franchise and independent customer base,” he told investors on Thursday.
“We have responded transparently to these concerns and encouragingly have not experienced any material loss in pharmacy customers at present.
“Certainly from what we can see at the start of the new financial year, customers remain resilient, they support the strategy currently and I do think they’re in a holding pattern to fully understand what materialises into the future.”
Also on the Sigma results briefing was Chemist Warehouse chief financial officer Mark Davis, who reported Chemist Warehouse posted a 28.6 per cent lift in statutory profit before tax to $321 million in the first half of the 2024 financial year.
Total sales across Chemist Warehouse rose 13.5 per cent to $4.56b.
Mr Davis said the strong results were achieved despite the Federal Government’s 60-day dispensing changes coming into effect last September, allowing doctors to issue patients with a 60-day prescription instead of a 30-day supply.
“It’s fair to say the Chemist Warehouse value proposition is resonating strongly with customers in a challenging economic environment and with rising cost-of-living pressures,” he said.
“Execution is a key strength of CWG, in 2H and beyond we’re focused on growing the store network, both in Australia and internationally.”
Announced in December, the proposed deal will see Sigma merge with Chemist Warehouse to create a publicly-listed company on the Australian Securities Exchange via a “back-door listing”.
It is subject to numerous regulatory approvals, including from the Australian Consumer and Competition Commission, which started its review into the merger earlier this month.
Chemist Warehouse has more than 600 bricks-and-mortar stores in Australia, including 37 in WA. The retailer — which also operates in New Zealand, Ireland and China — generates about 70 per cent of revenue from “front-of-store” sales including cosmetics, vitamins and other non-prescription items.
This compared to about 27 per cent of revenue generated from these items at rival retailers.
Sigma posted a 9 per cent decline in full-year revenue to $3.32b, while earnings before interest and tax rose 20.4 per cent to $23.2m.
The ACCC will potentially announce findings or a final decision in June.
Source Agencies
