Dis-Chem has disclosed the impact of a controversial internal memo penned by former CEO Ivan Saltzman in October 2022 that prohibited the appointment and promotion of white people at the group.

Buried in its financial results for the first half of FY2024, it notes that it saw ‘softer FY23 second half performance impacted by negative publicity, which was carried forward into the first quarter of FY24’. 

Profit before tax in the second half of FY2023 (September to February) was down 11% to R560m (from R632m).

Moneyweb reports that this was masked by a once-off accounting gain of R72m from the purchase of a number of properties from directors and related parties, which was included in the overall profit figure for the year-end period.

Profits were up by 9.6% in the last financial year, but is way below the 30.4% increase in the previous year or the 31.9% jump in the first half of FY2023.

Moneyweb notes that it is not possible to discern exactly how much the elevated levels of load shedding in this period also dampened consumer demand, but a simplistic calculation assuming growth of 20% (slower than last year) would yield a profit before tax of R942m.

Its actual profit was R240m lower.

The board in October 2022 issued a lengthy statement saying it regretted ‘the wording and tone of an internal memorandum that has been erroneously widely shared’.

The Dis-Chem group did not address the memorandum or its contents in its 2023 annual report. It didn’t even refer to the ‘negative publicity’.

It simply stated that 88.5% of its SA employees are black and 66.4% are female.

Full Moneyweb report