Christmas sales boost Clicks results

Johannesburg – Christmas trading helped boost Clicks’ turnover, which was up 13.1%.

According to the group’s interim results for the six months ended February 28 2017, Christmas sales were key to the health and beauty retailer’s performance.

Overall the group’s turnover increased 8.5% to R13.1bn. The group reported a 14.7% increase in operating profit to over R840m, driven by increasing margins in retail and distribution.

Bottom line profit came to over R582m, up 14.5% compared to the previous period.

Headline earnings per share (Heps) grew 13.5% to 232 cents per share. The group declared an interim dividend of 88c per share, up 15.8%. The return on equity was at 47.2%.

"The Clicks chain is more price competitive than ever and pharmacy, front shop health and beauty all recorded double digit sales growth for the half year,” chief executive David Kneale said in a statement. He explained the group had gained market share in core merchandise categories.

Clicks Group’s franchise brands, including The Body Shop, GNC and Claire’s, increased turnover by 13.1%, outperforming the market’s 8.4%.

The group’s pharmaceutical distributor UPD increased its wholesale turnover by 9.6%, outperforming the market growth of 5.6%. Its share in the pharma market increased to 24.6%. Clicks’ core customers and private hospital groups account for 81.4% of UPD’s wholesale turnover.

During the period, the Competition Tribunal cleared the merger between Clicks and Netcare Group. Clicks implemented a long-term outsourcing agreement with the private hospital group. It took over the management of 37 Medicross pharmacies and opened Clicks front shops in 41 Netcare hospitals.

READ: Clicks clears hurdle to run Netcare pharmacies

Kneale explained that the retailer opened 89 new stores, expanding its network to 600 stores. The pharmacy network expanded to 459 stores, 59 new stores were opened. The retailer has a goal of 800 stores.

Capital expenditure for the period came to R249m, compared R203m in the previous period. The expenditure was directed to new stores, pharmacies, store refurbishments, supply chain and information technology.

Capital investment for the year has been increased to R577m to support the expansion of the business. 

Outlook

The group expects consumer spending to be constrained, given low economic growth, higher taxes and political turbulence, said Kneale.

"However, the health and beauty markets in which we operate have proven to be relatively resilient to economic downturns,” he said.

The group will look to control costs and manage cash efficiently.  It projects a growth in diluted Heps from 11% to 16% for the full financial year.

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