Johannesburg – The Clicks Group has reported an increase in its bottom line as revenue grows.
On Friday, the listed retailer of pharma and household products said revenue gained 8.5 percent to R13.1 billion in the six months to February, leading to an increase of 13.5 percent in diluted headline earnings per share to 232 cents.
This, it says in a statement to shareholders, was driven by strong health and beauty retail trading.
It notes it increased sales 13.1 percent despite the slow economy, which it says shows its resilience.
South Africa’s economy grew just 0.3 percent last year, and is projected to gain around a percent this year.
It did not indicate how much of its sales growth was due to product inflation, but notes this should be between 5 and 6 percent over the full year.
Clicks says operating profit was 14.7 percent higher at R840 million, while its operating margin expanded by 30 basis points to 6.4 percent as both Clicks and UPD improved margins.
The interim dividend has been increased by 15.8 percent to 88 cents per share.
Clicks adds consumer spending will continue to be constrained in the months ahead, with low economic growth, higher taxes and ongoing political turbulence weighing negatively on disposable income and consumer sentiment.
It says, however, the health and beauty markets in which the group operates are relatively resilient and, in the current environment, management will focus on protecting income, controlling costs and managing cash efficiently.
The company, which will spend a record R577 million in the financial year, anticipates full year headline earnings per share being between 11 and 16 percent higher than last year.
Headline earnings per share is a key measure of performance, as this indicator strips out non-essential items.
However, its forecast is based on the fact that the consumer spending environment will remain constrained in the second half of the financial year, and its inflation prediction.
CEO David Kneale says Clicks gained market share in all core merchandise categories.
Read also: Clicks grows sales 13.6%
“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. The results were supported by buoyant Christmas trading where customers responded positively to our value promotions and differentiated product ranges.”
Clicks continues to expand its store network, reaching the 600 store milestone following the opening of a net 89 new stores. The Clicks pharmacy network was increased to 459. Clicks remains on track to achieve its goal of 800 stores in South Africa, says Kneale.
Capital expenditure of R249 million was invested during the first half, mainly in new stores and pharmacies, store refurbishments, supply chain and information technology.
UPD, the group’s pharmaceutical distributor, increased wholesale turnover by 9.6 percent, ahead of the pharma market growth of 5.6 percent, with market share increasing to 24.6 percent. The business delivered excellent growth in operating profit of 22.1 percent through efficient cost and inventory management.
BUSINESS REPORT ONLINE