Shop pharmacy shares collapse: logistics problems slow down sales growth. The online drug dealer Shop Apotheke is struggling with logistics problems, which is why the annual forecast may be shaky.

The online drug dealer Shop Apotheke is stumbling on its growth path. A currently tense labor market and the move to the new location in Sevenum in the Netherlands recently led to logistics problems, as the company from Venlo announced on Tuesday. As a result, not only did sales growth slow down in the second quarter, but the management board now also describes the annual forecast as “challenging”.

In the first half of the year, according to preliminary calculations, the shop pharmacy’s revenues increased by 14.9 percent to 534 million euros compared to the same period of the previous year; however, in the second quarter the company only achieved an increase in sales of 7.3 percent to 250 million euros. Sales with over-the-counter products grew by a double-digit percentage, but Shop Apotheke had to accept a decline in sales from prescription drugs.

For the time being, the Management Board is maintaining the forecast for the full year. However, the management is already pointing out that the development of the next few weeks will be decisive for a possible adjustment of the forecast. So far, the company has been assuming sales growth of around 20 percent and an operating margin (Ebitda) of 2.3 to 2.8 percent for the current financial year.
Even if Shop Apotheke described the declining sales as a temporary effect and emphasized persistently high customer demand in all countries, this could not appease investors on Tuesday. The share price collapsed at its peak by almost twelve percent to 139.50 euros. The papers last cost less at the end of 2020. By the end of trading, the Shop Apotheke share had lost 12.59 percent via XETRA to EUR 138.20. Since the record high of 249 euros at the beginning of the year, the price has already fallen by almost 44 percent.

The setback is not only due to the recent problems, however. In recent months, for example, with the progress of the vaccination campaigns in many European countries, many investors have cashed in with the winners of the corona crisis and rather shifted into cyclical values ​​that are believed to have more potential in an economic upswing.
In 2020, the Shop Apotheke was the biggest winner in the MDAX with a price increase of almost 241 percent. Up to the record high in early 2021, it was even a good 470 percent from the end of 2019. The company benefited greatly from the fact that many people shied away from going to the pharmacy for fear of corona infection and preferred to shop online. Shop Apotheke posted high growth rates, particularly in non-German-speaking countries.
Currently, the papers still cost around three times as much as at the beginning of the corona pandemic, but with the price slide on Tuesday, the chart image has clouded over further.
The support around 150 euros – in this area the price had recently caught again and again – did not last. If this remains the case until the end of trading, the picture would probably continue to darken. In addition, the papers now slid well below the 21, 50 and 200-day lines – indicators of the short to long-term trend.

While the number of active customers rose by a further 300,000 to well over seven million in the second quarter, Shop Apotheke was apparently unable to keep pace with its logistics. According to the announcement, CEO Stefan Feltens blamed the slowdown in sales on the one hand on problems in finding personnel. The occasional parallel operation of two logistics centers also caused difficulties, which increased the complexity of the processes. The changeover to “the next level of automation” is taking longer than originally planned.
Alexander Thiel, an analyst at the US investment bank Jefferies, spoke of disappointing preliminary figures for the second quarter. From his point of view, Shop Apotheke was hit more clearly than initially assumed by the bonus ban on prescription drugs. With the On-Site Pharmacy Strengthening Act, which has been in force since the end of 2020, mail-order pharmacies are no longer allowed to grant discounts on drugs for which a doctor has to write a prescription. Doc Morris, one of Shop Apotheke’s biggest competitors, subsequently announced legal action against the law. Jefferies analyst Thiel also described the business with non-prescription drugs as surprisingly weak compared to the high prior-year basis.

Shop Apotheke has announced that it will develop into a “customer-centric e-pharmacy platform” in the coming years and is also relying on so-called “cross-selling”: Customers are to be encouraged to buy non-prescription products in addition to prescription drugs . The group also has high hopes for the introduction of the e-prescription in Germany – a test phase in the model region Berlin-Brandenburg has just started at the beginning of the month.
Shop Apotheke plans to publish the full interim report for the first half of the year on August 5th