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Dis-Chem shares fall the most since May after profit warning

Dis-Chem says a continuing strike over wages will result in lower than expected full-year earnings.
Dis-Chem Pharmacies plunged the most in nine months after South Africa’s second-biggest pharmacy chain said a continuing strike over wages will see full-year earnings come in below the company’s guided range.

Loss of income and additional costs linked to the labour unrest have amounted to R50 million ($3.6 million) to date, the Johannesburg-based company said in a statement on Thursday. The strike, which mainly affects the wholesale operation, had a particular impact on the typically busy December period, when same-store sales fell 2.5%. 

The shares slumped as much as 7.1%, the most since May 4, before paring the loss to be 1.1% lower by 9:48 am. Still, the stock has gained 42% since an initial public offering in 2016.

Dis-Chem is refusing to negotiate with the National Union of Public Service and Allied Workers, which initiated the strike starting in November, because the company says the labour group isn’t representative of the work force. In any case, the call for a minimum wage of R12 500, annual increases of 12.5% for three years and a guaranteed bonus are “unreasonable considering the economic climate,” the retailer said.

© 2019 Bloomberg L.P
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