'3 for 2' helps Clicks grow festive season sales

Cape Town – Health and beauty retailer Clicks said in a trading update on Monday it has continued on a strong growth trend in the 20 weeks to mid-January 2018.

Sales increased by 14.2% over the period.

According to CEO David Kneale the Clicks chain continued to show its resilience in the current tight consumer spending environment.

Clicks reported real volume growth of 4.8%. Comparable store sales grew by 7.5% with selling price inflation averaging 2.7% over the period.

"Sales continue to be driven by our strong promotional offer, with the '3 for 2' promotion on Christmas gifting again proving highly attractive. We are also encouraged by the incremental sales from our online store over the festive season,” he said.

Clicks Group’s total turnover for the period increased by 11.3% to R11.1bn. Retail sales increased by 13.0% and by 6.7% on a comparable store basis, with selling price inflation of 3.0%.

UPD, the group’s pharmaceutical wholesale and distribution business, grew turnover by 11.6%, ahead of selling price inflation of 6.2%.

Kneale said inflation is expected to moderate further in the months ahead, particularly in UPD, which will be impacted by the recently announced increase in the single exit price of medicines of only 1.26% for 2018.

“While we are not anticipating any easing of the financial pressure on consumers, we remain confident in our ability to trade through these challenging market conditions, as demonstrated by our recent performance,” concluded Kneale.

Fin24 reported in October last year that Clicks Group increased operating profit by 15.4% to R1.8bn in the year to August 2017, driven by strong retail health and beauty sales which grew by 14.7%.

Group turnover increased by 10.9% to R26.8bn and diluted headline earnings per share by 14.5% to R5.02. The group increased its operating margin by 30 basis points to 6.8%.

At the time Clicks said it remains highly cash generative, with cash inflows from operations exceeding R2bn for the first time.

Renier de Bruyn, an analyst at Sanlam Private Wealth, told Fin24 at the time that Clicks has seen continued market share growth in all major categories. He added that, although consumers are under pressure, the pharmacy and health and beauty market is more resilient than rest of retail market.

By mid morning the Clicks share price was up 2.34% at R177.71.

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