Dis-Chem Reports 8% Sales Growth Driven by Loyalty Program

South African pharmacy chain Dis-Chem reported an 8% increase in revenue to R23 billion for the six months ending August 31, 2026, driven largely by the success of its Better Rewards loyalty program. Despite constrained consumer spending, the Johannesburg-based company achieved significant top-line growth and market share gains during the period.

The Better Rewards loyalty scheme, which replaced the traditional point-accumulation system in October 2025, offers members instant discounts at the till rather than points for later redemption. According to the company, active membership grew by 27% to 8.2 million members, with Better Rewards participants accounting for 86.1% of total sales. Over its first year, the program has returned R1.5 billion in instant value to customers.

Chief Executive Officer Rui Morais highlighted the impact of the initiative, describing the resulting market-share gains as the largest during his 16 years with the company. Morais noted that the revenue growth and improved retail total income margin reflect the sustainability of the program in helping shoppers navigate a challenging economic climate.

However, despite higher revenue, Dis-Chem experienced a decline in profitability as rising expenses offset sales gains. Basic earnings per share dropped by more than 13% to 64.1 cents, while headline earnings per share fell 12.8% to 64.3 cents. Headline earnings overall decreased to R550.1 million from R632.5 million a year earlier.

Group expenses rose by 12.1% during the interim period, outpacing total income growth. Retail expenses climbed 13.7%, pushed higher by investments in new stores and spending at X, Bigly Labs, the company's technology and data division. Dis-Chem has invested approximately R240 million into replatforming its digital infrastructure and operational environment through the innovation unit since its launch.

The wholesale division also contributed to overall performance, with revenue increasing by 9.6% to R18.4 billion. Wholesale revenue to independent pharmacies and The Local Choice franchises grew by 7.0%, with the wholesale arm now servicing 1,690 independently owned pharmacies across the market.

Following the financial results, Dis-Chem reduced its interim dividend by 12.9% to 25.62 cents per share. The company's share price saw a notable decline in trading following the announcement, reflecting investor response to the higher cost base.

Looking ahead, management anticipates a more even distribution of earnings across the first and second halves of the 2027 financial year. The company expects to begin demonstrating measurable returns from its technology and healthcare investments as it continues its expansion, having opened 14 new stores during the first half and planning additional locations.