Co-founder speaks on Chemist Warehouse’s future

Despite recent speculation that Chemist Warehouse could be listing on the ASX, there are no plans to take the company public, its chairman says

In November 2017, The Australian Financial Review’s Street Talk column suggested that recent meetings between the discount giant and fund managers and investment bankers could mean a “potential run at the ASX boards”.

At the time, Chemist Warehouse declined to “rule anything in or out,” the AFR reported.

Now, co-founder and chairman Jack Gance has set the record straight.

He told The Australian’s Eli Greenblat that there is no interest in an initial public offer – though a range of options had been investigated.

Instead, Chemist Warehouse – as well as the MyChemist group – plans to continue its policy of seeking new growth within Australia and internationally, particularly New Zealand.

“We look at all options but at this stage we have no interest in any public float,” Mr Gance told Mr Greenblat.

“We are focused on future growth, and we just expanded into New Zealand. And that has been extremely well received, our first stores overseas, and I think it’s probably the busiest store in New Zealand as of today.

“We have only been there three months and we are looking at doing another three to four stores in [New Zealand] in the next six months.”

Mr Greenblat writes that the MyChemist Retail Group’s financials are “hard to penetrate” but recent reports have shown its 2016 profits to be more than $100 million.

The AFR’s Rich Editor John Stensholt had reported in 2017 that the net profit was $101 million in the 2015-6 financial year, up from $97 million the previous year.

Mr Greenblat suggested that the group has “faced its own competitive threat” from the Amazon Marketplace launch at the end of 2017, but Mr Gance was unfazed.

“There is a lot of (competitive) activity going on and a lot of people are very nervous, but it hasn’t really affected us. We are very competitive and we know that our prices are much more competitive than Amazon,” he said.

“It has been a soft launch for Amazon and it hasn’t really affected us that much.”

Late last year pharmacy consultant Bruce Annabel told the AJP that Chemist Warehouse could potentially list its management structure – “but the question is why would they want to, what do they get out of it, unless someone wants to take cash off the table or they need more money for expansion into another market?

“Apart from that they don’t necessarily need it.”

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