Clicks' diluted headline earnings per share are expected to see an increase of 15 percent to 18 percent. File Photo: IOL

DURBAN – Pharmaceutical health and beauty retailer Clicks rose to its highest level on the JSE after the group revised up its earlier guidance to investors, saying that it now expected a double digit growth in profits for the year to end August. 

The group said in a trading update its diluted headline earnings per share (Heps) would see an increase of 15 to 18 percent during the period. Clicks said the Heps would be between 661.6 cents and 678.9c a share.

“At the time of the release of the group’s interim results on April 17, shareholders were advised through SENS that diluted headline earnings per share for the year to end August was forecast to increase by between 10 and 15 percent over the 2018 financial year,” the group said.

Clicks said the Heps for the 2018 financial year had been restated to 575.3c, following the adoption of IFRS 9 and IFRS 15.

It said before the adoption of IFRS 9 and IFRS 15, Heps rose 15.1 percent to 578c.

Clicks attributed the expected surge in earnings to a stronger retail performance in the second half of the year, contracts gained by its pharmaceutical distributor UPD and improvements in working capital management across the business. 

The shares closed 13.66 percent higher at R248 – the highest since the group listed on the JSE in in 1996 – to take its market capitalisation to R65 billion. 

Its industry peer, Dis-Chem Pharmacies, was also bullish on the market and closed 2.89 percent higher at R23.88 on the JSE yesterday. 

Chief executive Vikesh Ramsunder said during the half-year results presentation that UPD would benefit from being awarded two new bulk distribution contracts, which were expected to commence late in the second half.

The UPD reported a 27.2 percent increase in operating profit and a 21.9 percent increase in total turnover, with combined wholesale and bulk distribution to R10.2bn.

The group's overall turnover increased 6.2 percent to R15.3bn, while retail sales grew 7.7 percent and by 4.5 percent in comparable stores, with selling price inflation of only 1 percent.

Clicks said it planned to open 41 stores in the next financial year, well ahead of its target range of between 25 and 30 stores.

It said it would spend R700 million on capital investment across its store and pharmacy network, as well as infrastructure, in the next financial year to support the increased scale of the business.

Clicks will release its results on October 24.