CW has been mentioned a few times in the report but not any guide as to profitability for the working capital being utilised, and I must ask why is SIG engaging again with a very aggressive competitor of its own brands?
"One pleasing complication to the program was the FMCG supply contract with Chemist Warehouse. As we announced in November, we reached agreement to re-commence the supply of FMCG products on commercially acceptable terms to both parties. At full run rate, this will see approximately $700 - $800 million in revenue. This has resulted in our team effectively reinvesting some of the earlier gains under Project Pivot which is obviously more than offset by the margins we earn".
"Wholesale sales has had an extraordinary start to the year, accelerated by the Covid-19 volume growth. Excluding the Chemist Warehouse transition in each year, underlying volume for the first three months of this year is up over 30%, with revenue also up around 30%. This is likely to be a combination of new revenue and pulled forward demand, and where that balance sits will play out over the remainder of the year."
Was the above uplift anything to do with exports to China via some Chemists?
What I can say is that the combination of the actions we have taken, such as the efficiencies from Project Pivot, our DC investments, our various sales programs, and our expanding 3PL and medical consumables businesses has already produced a strong platform for earnings growth. The return of some of the Chemist Warehouse contract and the opportunities created as we emerge from the Covid-19 pandemic will further enhance this.
The report is not as informative as it should be especially with CW again in the mix. DYOR
SIG Price at posting:
59.0¢ Sentiment: None Disclosure: Not Held
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