Clicks sales steady but delayed

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Johannesburg - Clicks attributed sluggish sales over the festive season to consumers delaying shopping until after Christmas in order to benefit from markdown sales this month, the health and beauty retailer said yesterday in a trading update that nevertheless showed a steady performance.

The group’s sales grew by 11.6 percent year on year to R7.7 billion in the 21 weeks to January 19 compared with sales growth of 11.7 percent in the comparable 18-week period to December 2012. Total sales grew 7.5 percent and comparable store sales rose 5.3 percent.

The Clicks chain grew its turnover by 8.4 percent, with dispensary sales growing by 12.4 percent, and front shop sales up 7.2 percent. Comparable sales rose 5.7 percent with selling inflation of 3.6 percent.

Clicks chief executive David Kneale said the trend of consumers delaying purchases until close to Christmas continued this year and he had also noted a trend where consumers held off shopping in December to pick up markdowns in early January.

Kneale said sales growth was further affected by the decision to close all stores countrywide on December 15 as a mark of respect for Nelson Mandela’s funeral.

Body Shop grew sales by 6.3 percent with comparable stores sales up 2.9 percent.

Evan Walker, an equity analyst at 36One Asset Management, said Clicks overall divisions did better than other retailers.

South African retailers have recently reported weaker sales growth as rising unemployment and inflation curbs spending.

He said Musica’s poor performance was an exception since it fell under discretionary spending, which has been tightened. Musica increased same store sales by 1 percent, however, total sales declined by 1.9 percent.

Walker added that retailers should brace themselves for a downturn in consumer spending and added that even spending on markdowns might be limited this year.

“The results were at the top end compared to what we have seen from other retailers. It has been surprisingly good,” Walker said.

He said the strong showing in the trading update was also surprising because a large component of Clicks’s business lines fell under discretionary spending.

He added that it was clear the pharmacy division was taking market share from independent pharmacies. Sales in the UPD division, the company’s wholesale and distribution unit, climbed 19.5 percent.

Clicks shares rose 0.71 percent to close at R55.30 yesterday, while the general retailers index declined 2.45 percent. - Business Report


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