SIG -7.75%: Was sold off despite another year of strong headline growth, with the market focusing on revenue falling short of consensus following the transformational Chemist Warehouse combination. Australian Chemist Warehouse like-for-like sales remain impressive and management expects double-digit revenue and earnings growth in 1H27, but expectations around this business are high.
Key results:
- Revenue of A$10.84bn, up 81% but broadly in line/slightly ahead of A$10.82bn expected.
- Earnings (EBITDA) of A$1.16bn, below consensus of A$1.17bn.
- Adjusted EPS of 6.2c, versus 6.5c expected.
- Australian Chemist Warehouse network like-for-like sales growth of 13.4%.
- Final dividend of 2.0cps, taking the full-year dividend to 4.0cps.
The underlying growth story remains intact. Chemist Warehouse’s Australian network continues to generate double-digit like-for-like growth into FY27, while another 13 Australian and 19 international CW stores are expected to be onboarded during 1H. Management also remains on track for A$100m of annual synergies by FY29, while Amcal and Discount Drug Stores are expected to return to growth.
MM’s view: We wouldn’t read today’s fall as evidence the Chemist Warehouse story has gone off the rails — 13.4% like-for-like growth is solid. This has become one of the market’s preferred structural growth stories, and the price investors are prepared to pay assumes strong execution with very few blemishes. We still like the combination strategically where CW brings the growth engine, Sigma brings distribution scale, and A$100m of targeted synergies provides another lever, though require strong execution in the short-term, something we’re not convinced of right now.
MM is neutral toward SIG
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