Despite brisk trading, Dis-Chem refuses to pay full rent

Business Insider SA
Dischem, Clicks, Medi-rite
Dis-Chem store shelves ran empty of goods like hand santiser in the first week of lockdown. Photo: Bombi Mavundza
  • Dis-Chem is refusing to pay full rent to mall owners, despite being allowed to trade in essential goods throughout the national lockdown.
  • While acknowledging that trade last month was higher than expected, Dis-Chem says much of the increased profit went to above-inflation salary increases.
  • Also, its essential products have lower profit margins than non-essentials. 
  • Clicks, however, continues to pay rent.
  • For more stories, go to Business Insider's home page.

Despite being one of only a few retailers allowed to trade through the lockdown, Dis-Chem is refusing to pay its full rent to mall owners.

Malls in South African are facing crippling losses as non-trading retailers, including The Foschini Group, Pepkor and KFC's owner, Yum Brands, halted rental payments during the national lockdown.

Despite doing brisk business – in a statement on Sunday, Dis-Chem acknowledged that trade in March was higher than it expected – the company says it is trying to negotiate a “fair rental” with landlords.

READ | Dis-Chem now offers drive-through Covid-19 tests - at R850 each

Business Day reported that mall owner Resilient has not received any rent from Dis-Chem for April, and in other cases the retailer only paid a part of its mall rentals.

CEO Ivan Saltzman says it is seeking to “find fair compensation with landlords”.

While confirming that sales last month were higher than expected, Saltzman said “much of that additional profit” was paid to staff as part of above-inflation salary increases, which was effective from March.

And while the company is allowed to trade in essential goods, these products have a smaller profit margin than its non-essential products.

“Non-essential goods contribute significantly to our normal turnover and essential goods are traditionally much lower profit items. A greater proportion of our essential goods are medicine sales which yield much lower profit margins and pricing remains restricted by the gazetted single exit price."

“Based on the prevailing situation and the extended lockdown we have paid all levies and other municipal costs together with a fair and significant portion of the base rental together with suggesting a turnover based rental.”

“This, we feel, is a fair compromise considering the very depressed restricted trading environment.”

Its competitor Clicks, however, is paying rent, Business Day noted.

Saltzman said the company’s primary responsibility will be to retain its full workforce and to “pay them as we normally would”. To ensure store safety and physical distancing, many of them are already working reduced hours to minimise risks to customers and themselves.

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