Upbeat Clicks plans aggressive expansion
Despite the depressed economy and constrained consumer spending, retailer Clicks is planning to open 200 new stores over the next five to 10 years and has set aside R577 million for infrastructure investment in its 2017 financial year, the group said in its interim results presentation on Friday.
"We should avoid being too depressed with the downgrades and the slowing down in the economy. It is not only South Africa that is being downgraded, other countries also get downgraded. We believe in the country, we have created 1 000 new jobs in the past year and we are investing more than R600 million in new stores. We are also improving our IT division. Our short-term target is to open 25 new stores a year and if we are consistent we are going to achieve that 800 target in the specified time, as we are on track," said CEO David Kneale.
In the six months to February, Clicks reported a 13,5 percent increase in diluted headline earnings per share to 232 cents. Group turnover increased 8,5 percent to R13,1 billion and operating profit was 14,7 percent higher at R840 million. The group operating margin expanded 30 basis points to 6,4%. The board declared an interim dividend of 88 cents a share, up 15,8 percent compared to 2016.
Clicks Group is a retail-led healthcare group, which has been listed in the Food and Drug Retailers sector on the JSE since 1996. Over the past decade, the group has grown into a leader in the healthcare market where Clicks has a 19,6 percent share of the retail pharmacy market and its subsidiary UPD, which the group acquired in 2003, a 24,1 percent share of the private pharmaceutical wholesale market. Clicks, Musica, The Body Shop, GNC and Claire's are market-leading group brands and have a combined footprint of 689 stores, including 36 in the neighbouring countries of Namibia, Botswana, Swaziland and Lesotho. The results statement made no mention of the group's CD and DVD retailer Musica.
Kneale revealed that more than two-thirds of sales had emanated from the 6,5 million active Clubcard loyalty programme members, with the Clicks chain seeing a rise in sales of 13,1 percent, which was driven in part by competitive pricing and a strong portfolio of private-label products. Comparable store sales grew by 8.4% with selling-price inflation of 4,8 percent.
"Clicks Clubcard is SA's most generous loyalty programme. It is an enormously powerful weapon that our customers love and that we will continue to improve and fine-tune," Kneale said.
A former chief commercial officer of health and beauty retailer Boots Group in the UK, the 62-year-old has been at the helm since January 2006. He has been assisted by CFO Michael Fleming since February 2011. Fleming is the former finance boss of Tiger Brands.