The impact of an internal memo that placed a moratorium on the hiring of white applicants at Dis-Chem has been released and it cost the company millions.
The controversial memo was written by former CEO Ivan Saltzman in October 2022 and noted that Dis-Chem would not appoint or promote any white person within the group.
Last week, the company released its interim condensed consolidated financial results for the six months ended August 31.
The company stated that “in [financial year 2023] FY23, the softer second-half performance was largely attributable to the impact of negative publicity, which was carried forward into the first quarter of [financial year 2024] FY24.
“As a function of being a high-growth business, investment in resources to facilitate growth is necessary but does introduce the risk of negative operating leverage during periods of softer sales,” it said.
“In the second half of the financial year for 2023, profits were down by 11% from R632 million to R560 million.”
ONSLAUGHT OF BACKLASH
After the memo was leaked in 2022, the pharmacy faced a major backlash.
The South African Jewish Board of Deputies at the time condemned the statement on Twitter (now X).
The board stated, “The Dis-Chem letter has elicited high emotions. Sadly this has resulted in blatant aggression towards Jewish South Africans. We condemn these vile comments in the strongest terms”.
Political figure, Herman Mashaba said, “As far as I am concerned, that letter by the CEO of Dis-Chem was racial and divisive. Racial quotas contributed to our current economic woes. Hire South Africans on Merit, and focus on investment in training where you experience weaknesses.”
In November 2022, facing the impact of the memo, Dis-Chem withdrew the moratorium on white appointments.
LOOKING TO A NEW ERA
In May this year Dis-Chem said it is looking to a new era as it announced that Ivan Saltzman would step down as CEO at the end of June, 2023. Saltzman co-founded Dis-Chem with his wife Lynette in 1978.
Rui Morais, the group’s former chief financial officer is now CEO of the company.
In the statement last week, Dis-Chem said that it hopes to focus on key growth drivers that would enable it to adapt and mitigate against the current environment where the consumer is struggling financially.
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