Nompumelelo Magwaza
AN “IMPRESSIVE” trading update pushed personal care retailer Clicks Group’s shares to an all-time high yesterday.
Clicks shares climbed as much as 7.5 percent to R93.74 before closing up 5.4 percent at R91.89.
Retail analysts also agreed that Clicks had a good 20 weeks to January and might have taken market share from other retailers.
The group also owns brands such as The Body Shop, Musica and Clicks stores and also operates the United Pharmaceutical Distributors (UPD).
The Clicks Group increased sales by 13.9 percent to R8.2 billion during the 20 weeks to January 18. Selling inflation was consistent with the prior period and averaged 3.6 percent.
The Clicks chain grew turnover by 10.3 percent, driven by a well-planned promotional programme, which appealed to value-conscious consumers.
Clicks showed real volume growth of 3.6 percent as comparable sales grew by 7.6 percent with selling inflation of 4 percent.
Its music retailer, Musica, grew sales by 2 percent with same store sales growth of 1 percent with The Body Shop sales increasing by 10 percent.
Customer behaviour
Clicks chief executive David Kneale said: “Customer behaviour continues to reflect a shift to shopping later in the festive season, with group experiencing record trading in the three days before Christmas. We have also continued to see buoyant trading in the period after Christmas and into the New Year, again driven by promotion activity.”
UPD delivered a turnover increase of 21 percent, benefiting from growing distribution.
“The business faces ongoing margin pressure from the increasing generic penetration in the local market.”
Wayne McCurrie, the senior portfolio manager at Momentum Asset Management, said Clicks’ trading update was impressive.
“Christmas trading in total was reasonable for every other retailer that has reported. Clicks must have gained market share from someone because they have done exceptionally well,” said McCurrie.
He added that UPD’s performance was fantastic.
Daniel Isaacs, an equity analysts at 36ONE Asset Management, said the trading update came above expectation and Clicks had a nice pick-up in same-store volumes from the comparable half.
He believed that group revenue growth was getting a boost from UPD, which however was a smaller contributor to profit growth.
Its lower margins had indicated that the division was under margin pressure.
“The sense that we are getting from most of the retailers was that Christmas trading was not as bad as most expected.” Isaacs added that Clicks also benefited from well-planned store promotions during the festive trading period.
He added Clicks store traffic was protected from the larger retailers because of their in-store pharmacy offering.