Drug distributor and health and beauty products retailer Australian Pharmaceutical Industries (API) says consumer confidence is improving, but the company is facing intense competition.

API supplies health and beauty products and drugs to pharmacists under the Priceline Pharmacy, Soul Pattinson Chemist and Pharmacist Advice banners.

Also, API operates the Priceline health and beauty stores.

The company says its Priceline stores generated a 1.9 per cent lift in like-for-like sales in the seven weeks to October 19.

“While it is still early days, there are encouraging signs that there is a lift in consumer confidence,” API said on Thursday.

API on Thursday booked an annual net profit of $24.3 million for its fiscal year to August 31, down 19.8 per cent on the profit of $30.3 million in the prior year.

API said its retail business, which excludes dispensary sales, recorded sales growth of 2.9 per cent to $676.5 million over fiscal 2013 amid intense competition from discount stores, supermarkets, online shopping and department stores.

API’s Priceline network expanded to 363 stores over the year – a net increase of 14.

API’s pharmacy distribution sales fell 1.5 per cent to $2.3 billion, following price reductions to drugs covered by the Pharmaceutical Benefits Scheme (PBS).

API said pharmacies would continue to feel the impact of PBS reforms over the next 12 to 18 months.

This would put the onus on front-of-store health and beauty product sales to make up for lost pharmacy revenue.

Shares in API were one cent higher at 57 cents at 1114 AEDT.