Clicks' sales almost unscathed by Covid-19 restrictions

Clicks is still speaking resolutely on expansion and continuing with their planned store and pharmacy rollouts in the latter part of the year.
Clicks is still speaking resolutely on expansion and continuing with their planned store and pharmacy rollouts in the latter part of the year.
  • Clicks Group has published a trading update showing revenues grew ahead of the first half of its financial year.
  • This was dispite being subjected to trading restrictions in the second half which began few weeks before SA went on lockdown.
  • Clicks benefitted from online sales and having over 70% of its stores located in convenience and neighbourhood shopping centres.

Despite falling foot traffic and less frequent shopping trips by customers, pharmaceutical retailer Clicks Group is expecting double digit increase in its half year earnings.

Faced with restrictions to selling only essential items under lockdown level five and shorter trading hours during most of the current lockdown, Clicks reported turnover for the 23 weeks to 9 August increasing 10.2%. That was marginally ahead of the 9.9% growth the group reported for the six months to February, before all the lockdown restrictions came into effect.

Clicks, like other pharmacy and food retailers benefitted from being an essential service provider throughout the lockdown period. But other companies, such as Pick n Pay which has offered severance packages to over 1 400 staff members, recently spoke about how the trading restrictions were hurting them despite their essential service provider status.

Clicks' direct competitor, Dis-Chem also expressed concerns about the "unknown" ultimate impact of the lockdown when sales started to fall in April and May. But Clicks said on Wednesday that it also observed that consumers chose to stay home to reduce the risk of contracting Covid-19 but the group's online sales grew significantly since the start of lockdown. Clicks has been trading online for about three years and thus confronted Covid-19 better prepared to serve its customers through e-commerce platforms then many other retailers.

 The company said it also benefitted from the fact that it owns more stores in convenience locations.

"The decline in footfall at super regional and regional malls across the country has impacted sales in destination stores. However, Clicks is well positioned in this environment with over 70% of its stores located in convenience and neighbourhood shopping centres," the company said in a trading update.

Clicks' total retail sales increased by 7.5% between 1 March and 9 August 2020 with selling priictions, sales ae inflation up 2.2%. Before Covid-19, in the six months to February, the group's retail health and beauty sales were up 9.6% showing that even under the current restrictions, sales growth was not marginally behind what the company achieved in the first half.

Its distribution business, United Pharmaceutical Distributors grew sales by 11.7%. Clicks said it expects its diluted headline earnings per share for the year ending 31 August 2020 to increase by between 10% and 15% compared to the 663.6 cents reported in the 2019 financial year.

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