Hire pharmacists from retail pharmacies, making it difficult for competitors to operate
Rong Viet Securities Company (VDSC) has just reported on FPT Digital Retail Joint Stock Company (FPT Retail), which updated the business activities of Long Chau pharmacy chain.
Rong Viet said that in the second half of 2021, the monthly revenue per store of Long Chau increased rapidly to more than 1.3 billion VND – 1.4 billion VND. Capturing good sales growth momentum, the chain expanded significantly in the fourth quarter of 2021 with 92 new stores opening to end the year with 400 stores.
As a result, Long Chau’s revenue more than tripled to VND4,000 billion. Along with a favorable product structure, helping the gross profit margin to increase to 20% in the whole year of 2021, Long Chau was able to cover operating costs and contribute a net profit of 4 billion dong in 2021 compared to the previous year. loss of -113 billion dong, acting as the main driver for FPT Retail’s profit after tax growth in 2021.
Rong Viet said that FPT Retail’s plan is to rapidly develop the Long Chau pharmacy chain in the coming years (300-400 new stores open every year for the next 3 years). Reasonable expansion strategy in the context of favorable market conditions, along with Long Chau’s competitive advantage over retail stores will create good leverage for the chain to boost revenue and profit to a high level. new in the future.
Most new stores will generally be smaller in size (50-100m2) as the chain penetrates deeper into secondary cities, and expands its coverage in existing provinces. This move shows that management strongly believes in Long Chau’s “success formula”: not only is it competitive on price, but the chain is also known for its large number of SKUs and the ability to customize inventory groups. of stores by region to better capture local demand.
Notably, Rong Viet highly appreciates the ability of the pharmacist recruitment process chain to ensure enough workers for the new facilities. In many cases, Long Chau has successfully hired pharmacists from other small and medium-sized pharmaceutical retailers in the region, making it difficult for these stores to maintain operations.
Another key factor is that while sales per store will drop after their peak during the pandemic, post-pandemic consumer behavior remains relatively supportive: sick people are likely to choose to consult with a pharmacist before considering going to the hospital and the tendency to hoard medical devices/functional foods.
For 2022, Rong Viet forecasts that Long Chau’s revenue and pre-tax profit will reach VND 7,200 billion (up 81%) and VND 47 billion (about 10 times the previous year).
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