Chemist Warehouse boss targets growth of ‘infinity and beyond’

The Chemist Warehouse business started with a single pharmacy in Reservoir, Melbourne, in 1972, before opening its first MyChemist branded store in 1997. It opened the first Chemist Warehouse in 2000, and now has 54 stores in New Zealand, six in Ireland and six in China. It also sells online through Alibaba’s e-commerce platform in China, Tmall.

Mr Verrocchi said Chemist Warehouse opened an average of 31 stores annually, and he expected the number of stores in Ireland – where the international expansion is focused – to reach 10 by the end of February. “Ireland is the start of our European expansion,” he told the briefing on Monday.

Growth in China had been severely curtailed by the COVID-19 pandemic when international travel was shut down, but was being reinvigorated, Mr Verrocchi said. Two more stores were opening in China, and he believed there was a medium-term opportunity for up to 70 more stores.

‘Build it, and they will come’

The latest Chemist Warehouse accounts, for the 12 months to June 30, show the company had revenues of $3.09 billion, up from $2.99 billion one year earlier. Of that, $2.85 billion was generated in Australia, although international revenues grew from $185.6 million last year to $241.5 million in the past 12 months.

Victoria, with 231 outlets, makes up 42 per cent of the company’s Australian store network. “The penetration into other states isn’t quite as big,” Mr Verrocchi said.

Damien Gance, Chemist Warehouse’s chief commercial officer – who is related to two of the company’s founders, Jack Gance and Sam Gance – was similarly bullish. “It’s Field of Dreams stuff – build it, and they will come,” he said on the call.

“We have found our way into the Australian psyche,” he added.

Mr Verrocchi said that although the pandemic had pushed many Chemist Warehouse customers online, stores were still crucial to the success of the company because they were a destination where people planned to go shopping.

“It will never get more than 10 per cent of what we do,” Mr Verrocchi said of online. He added that franchisees generated 67 per cent of their revenues from “front-of-store” sales from items such as beauty products, vitamins and perfume.

That compared with about 27 per cent on average for non-Chemist Warehouse pharmacies in the industry, something Mr Verrocchi said showed the power of the business as a destination. “It’s a marketing machine,” he said.

The merger, if approved by the Australian Competition and Consumer Commission, will bring together the Chemist Warehouse brands and those operated by Sigma, Discount Drug Stores and Amcal. Sigma also has a large private label and own brands business, which includes Amcal+, Wagner, Pharmacy Care and Barely.