South Africa - Johannesburg - 30 December 2018 - Shoppers outside Clicks store. Picture: Karen Sandison/African News Agency(ANA)
South Africa - Johannesburg - 30 December 2018 - Shoppers outside Clicks store. Picture: Karen Sandison/African News Agency(ANA)

Clicks online store sales explode by 361% as shoppers avoid risk

By Edward West Time of article published Oct 23, 2020

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CAPE TOWN - Clicks Group’s online store grew sales by 361percent in the year to August as consumers chose to shop closer to home and less frequently through the lockdown and opted for home delivery to avoid the risk of contracting Covid-19.

Chief executive Vikesh Ramsunder said in a phone interview yesterday that although the online growth in the second half was off a low base, the platform had become their largest and fastest-growing store.

Online sales growth had slowed a little with the easing of lockdown restrictions, but the growth remained “exponential”, he said.

Clicks had invested in e-commerce and its digital platform over the past four years, and was reaping the benefits of this, but online trade was still low in South Africa and software, app and online platform were being enhanced continually.

In addition, over the longer term, further investment in the logistical “last mile” might also be necessary, as this was currently being done by third parties, he said.

“We are focused on return on investment, so we invest, then we measure its performance,” he said.

The group lifted diluted headline earnings a share by 13.7percent to 754cents for the year to August 2020, results which Ramsunder said were positive in a “very difficult environment.”

Earnings growth was driven by cost management, solid retail health and beauty sales and a strong performance by UPD, the group’s pharmaceutical wholesaler, he said.

A dividend of 450c per share was declared, 37.6percent up on last year this time.

Turnover increased by 9.6percent to R34.4billion and taxed profit grew by 11.8percent. Sales were impacted by an absence of the usual winter colds and flu, as consumers wore masks, worked from home and faced social distancing restrictions.

After returning R1.5bn to shareholders in dividends and share buybacks, the cash balance came to R2.2bn at year end.

Ramsunder said the performance of the past year, and particularly in the second half during the Covid-19 crisis, demonstrated the resilience of their health and beauty markets, and the business model.

He said new stores requiring investment of some R700million were planned for the new financial year.

As essential healthcare service providers, Clicks and UPD traded throughout the lockdown.

Retail health and beauty sales grew 8.4percent as Clicks claimed market share gains, which Ramsunder attributed to competitive pricing, differentiated products, new stores, strong online sales and the Clicks ClubCard, which grew membership.

The convenience of the store network was also an advantage with 74percent of them in convenience and neighbourhood shopping centres, which helped negate the slowdown in foot traffic at super regional and regional malls.

Clicks opened 39 stores in the year. The pharmacy network was increased to 585 following the opening of 40 pharmacies. “Fifty percent of the country’s population now live within 6km of a Clicks pharmacy,” he said.

UPD grew turnover 11.2percent after securing new wholesale and bulk distribution contracts.

Business to private hospital and independent pharmacies grew strongly due to increased demand for medicines and healthcare products .

Ramsunder said the consumer environment was expected to be “extremely constrained” in the year ahead.

Clicks shares declined 3.11percent on the JSE yesterday to close at R226.50.

BUSINESS REPORT

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