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.
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