Johannesburg - Clicks’ shares briefly rose to a record during the day yesterday after the beauty and pharmaceutical retailer reported market share gains that offset weaker consumer spending.
The stock gained 7.99 percent to close at R103 on the JSE yesterday, giving the company a market value of R25.35 billion.
The shares have climbed 30 percent this year, compared with a 5.3 percent gain in the FTSE/JSE Africa Food & Drug Retailers index.
“Clicks is taking market share across categories and from all our competitors,” Clicks chief executive David Kneale said.
“That was driven by frequent discount offers, lower prices and the company’s loyalty programme,” he said.
“Clicks has always been a value retailer – it’s core to what we are doing.
“The philosophy of the company, that has seen it achieve success, is embodied by the question that is asked of each customer: “Do you have a Clicks card? Everybody should have one,” Kneale said.
Clicks declared a profit of R955 million, which is 10.4 percent better than the R865m recorded in the same period last year.
Kneale, who makes no bones about being “the market leader in health and beauty”, has helped the group increase headline earnings per share by 16.8 percent, from 341.7c to 399.2c.
Diluted headline earnings per share rose 14 percent to 383.9c per share, Clicks said. That compares with a 384.6c a share estimate of 10 analysts surveyed.
“The Clicks story is essentially an organic growth story,” Kneale said. “We have not reached maturity yet in South Africa and it is always a lot easier to grow at home.
“We are some way away from our ultimate goal. The goal is to have 600 stores in South Africa. We have several years of expansion ahead of us,” Kneale said. Clicks has 460 stores at present.
The Clicks Group, whose brands include the Body Shop, specialty health and wellness retailer GNC, Musica and the recently launched Claire’s brand, said pharmaceutical wholesaler UPD now had market leading positions in both the pharmaceutical wholesale and distribution markets.
Expansion
Clicks plans capital expenditure of R432m this year, up 17 percent from a year earlier. About R227m of this year’s spend will be on store refurbishments and expansion and about R167m on IT systems and infrastructure, Kneale said.
The group increased its annual dividend by 23.7 percent, from 190c to 235c per share, as it reported a glowing set of results, with turnover up by 15.3 percent to R22.1 billion for the year to August 2015. It also generated a total shareholder return of 35.8 percent for the year.
Clicks had opened 22 new stores and 22 new pharmacies during the period under review. The ClubCard loyalty programme, which accounts for 75 percent of Clicks sales, increased its active membership to 5 million. It aims to open 20 to 25 new stores and 25 to 35 new pharmacies, while 50 stores are to be refurbished.
Jean Pierre Verster, an analyst at 36ONE Asset Management, said Clicks’s growth spoke to the fact that the combined pharmaceutical and front shop format of the group appealed to the consumer, along with the Clubcard.
“It also indicates good execution. This is a cash generative business, which again increased its dividend at a higher rate than earnings,” Verster said.
* Additional reporting by Bloomberg
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