The independent pharmacy chain Day Lewis has reported a £7 million drop in its operating profit this financial year, according to its annual financial statements, published last week (September 28).

As of March 31 this year, the chain said that it owned or managed 267 pharmacies in England, making it the second largest independent pharmacy group in the UK.

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The document revealed that Day Lewis posted £16m in operating profit for the year, down 31% from £23.1m in the previous financial year. 

It said that growing costs linked to “headline inflation rates” including staff costs, energy, utilities and rates and rent were the cause of this drop in profits, as its administrative expenses for the year rose by 17.5% to £109.5m. 

 

“Pausing acquisitions”

 

Day Lewis said that it was “pausing acquisitions” as part of a “continued” policy to limit its bank debt.

Instead, it said it was “enhancing the existing estate” by relocating branches, improving “added value services”, merging pharmacies and “disposing” of low-footfall branches.

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It added that it had drawn down £95m of its £110m revolving credit facility and had cash reserves of £26m, up from £4.6m in the previous financial year.

The annual report said that the company had “lobbied for additional funding” for the sector from the Department of Health and Social Care (DH) to “recognise the recent impact of inflation on operating costs”.

 

“Strong” performance

 

Despite the increased costs and limits to its expansion, Day Lewis boasted that its pharmacy performance “remained strong”.

It said that its services had performed “above average” and that it dispensed 25.2m prescriptions in the year, up 6.8% compared to the previous year.

With the national growth in dispensing increasing by 3.4%, it said that it had “outperform[ed] the market” by this measure.

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It attributed its dispensing success to “a large base of loyal, recurring customers”, with “almost 70%” of its dispensing coming from repeat prescriptions.

Day Lewis’s turnover for the year was £474m, up 8.9%, and its gross margin percentage “remained stable” at 26.5%.

It said that its pharmaceutical distribution was key to how the group “maximises margin” and that it had “continued to expand” its automated hub-and-spoke distribution centre in Croydon during the year.

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The report added that the multiple had introduced 24/7 collection kiosks in 58 of its pharmacies.

In June, C+D reported that Boots had recorded post-tax profits of £15m for 2022, after falling more than £100m into the red in 2021.

And in March, C+D reported that the Bestway Group – Well Pharmacy’s parent company –  reported annual profits of £4.14m in the 2022 financial year, a decline of 14.8%.