Australian Pharmaceutical Industries Ltd (ASX: API) shares are in focus Monday morning following a half-year profit downgrade by the retail pharmacy business.
API is the $750 million owner of chemists like Priceline pharmacies and operator of Soul Pattinson Chemists.
This morning, API released a trading update and profit outlook. In its announcement to the ASX, API said it expects its 2018 half-year profit to be down 9% compared to the prior corresponding period, on account of soft retail conditions.
“In contrast to the strong sales we experienced during 2016, consumer spending remained subdued throughout the 2017 calendar year and we did not see that change during the Christmas period,” API CEO, Richard Vincent, said.
Overall network sales were up 2% year-to-date while store sales fell 2.4%, on a like-for-like basis.
However, pleasingly, API said it expects full-year profit to be slightly higher than last year.
Vincent said the company has already taken steps to mitigate the negative effects of the consumer shift.
“We expect to see benefits flow from the steps we have taken to address the tougher retail environment,” he said.
“Foremost among these are investments to enhance our total customer experience, both in-store and via our digital transformation program that is designed to enrich our Sister Club loyalty program and advance our on-line capability into the future.”
Looking ahead, API’s expectations for growth in store numbers of Priceline and Priceline Pharmacy remain intact.
In addition, API assured investors of its “strong” financial position. “The dividend payment for the first half is expected to remain in line with the prior corresponding period,” the company added.
Other competitors in the pharmacy industry include Chemist Warehouse, EBOS Group Ltd. (ASX: EBO) and Sigma Healthcare Ltd (ASX: SIG).
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