KZN unrest cost Clicks more than R720m – making a big dent in its profit

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 Photo: Clicks
Photo: Clicks

The unrest in KwaZulu-Natal in July has had a big impact on Clicks, with the company downgrading its expected annual profit growth from 8% to 13% - to basically zero.

Some 6% of the company's stores – 52 Clicks stores and one The Body Shop store - were looted and vandalised in the province. Eleven stores are still closed. Nine should be opened in this financial year, while the final two damaged stores will be opened in the 2023 financial year.

The UPD and Clicks distribution centres in KwaZulu-Natal were both looted and damaged, but have been reopened.

Additional costs were incurred for private security services to protect the distribution centres as well as air transportation costs to supply medicines from Johannesburg to KwaZulu-Natal.

Clicks has submitted a R726 million claim to Sasria – including R522 million for loss of stock and R182 million for the replacement of fixed assets.

The group has already received R217 million from Sasria, which will be accounted for in the 2021 financial year, which ended in August. The remaining amount will be recognised in the following year.

In April, Clicks expected an increase of 8% to 13% in diluted headline profit for the year to August.

But due to the impact of the civil unrest, and the fact that only 30% of the total Sasria insurance claim has been accounted, the group now expects its profit for the year ended 31 August 2021 to increase by 0% to 3%. Without the impact of the civil unrest, profit would have been in line with the previous 8% to 13% range, Clicks said.

Group turnover from continuing operations - Musica was closed in the past year - increased by 10.2% (compared to growth of 10.5% in 2020).

Sales at Clicks as well as Body Shop, GNC and Claire’s increased by 8.3% (8.4% in 2020) over the past year. Its pharmaceutical distributor UPD increased its turnover by 12.3% (2020: 11.2%) over the prior year.

"Sales in the last seven weeks of the financial year were significantly impacted by the civil unrest in KZN. In addition to the store closures due to damages and the temporary store closures at the peak of the violence, trading in the affected areas remains well below the levels of the previous year and this is expected to continue in the short term," Clicks warned.

Clicks has now administered almost 600 000 vaccinations at 300 sites, and plans to open a further 268 sites in the coming weeks. 

Clicks expects to publish its annual results on 21 October.

In late-morning trading on Tuesday, its share price was down 0.8%.  

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