CLICKS, which has proven resilient through the tough economy due to the defensiveness of its core health and beauty business, is accelerating its expansion by opening 50 to 55 stores in the 2024 financial year.
CEO Bertina Engelbrecht said yesterday they had expanded the footprint to 902 stores with the opening of a net 41 new stores in the past year. A further 10 to 20 pharmacies were also planned to be opened this year.
In the six months to end-February 2024, 27 pharmacies were opened, extending Clicks’ pharmacy presence to 718. Currently 51% of the country’s population live within 5 kilometres of a Clicks pharmacy.
Engelbrecht said in an interview on the release of results for the six months to end-February that they would spend R920 million on capital investment in 2024.
She said they were expanding in spite of the weak economy because their stores were typically in “really good locations”, the stores have a broad appeal among many income groups, there were products that catered for when consumers buy down during periods of financial strain, Clicks was price-competitive relative to the other retailers, and its clients were loyal and were able to benefit from their loyalty programme.
Capital expenditure for the year would include R514m for new stores and pharmacies, and store refurbishments. A further R406m would be invested in supply chain, technology and infrastructure, including the ongoing investment in renewable energy solutions.
In the past six months, R314m was reinvested mainly in new stores and pharmacies, refurbishments, supply chain and information technology. The group had also invested R36m in renewable energy solutions, including the recent installation of additional solar panels and battery storage at the head office and UPD’s main distribution centre.
Engelbrecht said they had begun their renewable energy programme some six years ago and their stores were now able to trade throughout periods of load shedding.
Clicks directors have forecast full year headline earnings a share to increase between 10% and 15% when compared with the 2023 financial year. The balance sheet remained strong and by the end February 2024, the group held cash resources of R853m.
Engelbrecht said UPD (United Pharmaceutical Distributors) was expected to deliver a stronger second half as the wholesaler continued to improve performance.
Clicks Group lifted operating profit 13.5% to R1.9 billion in the six months after it strengthened margins, generated good cash flows and increased returns to shareholders.
Retail turnover grew by 12.4% with group turnover up 9% to R21.8bn. The group operating margin expanded by 30 basis points to 8.5%.
Headline earnings grew 10.5% to R1.3bn with diluted headline earnings per share increasing 13% to 534 cents, benefiting from share buybacks in the last 12 months.
The interim dividend was raised by 13.5% to 210 cents per share. The acquisitions of Sorbet, M-Kem and software development company 180 Degrees in the previous year had been successfully integrated and “are performing ahead of pre-acquisition expectations”.
The group returned R2bn to shareholders in dividends and share buybacks in the half year. Since the start of the group’s share buyback programme in 2006, R19.1bn had been returned to shareholders in dividends and buybacks, or roughly R1bn a year.
“Ours was the share to hold, it’s been an incredible journey,” she said.
Engelbrecht said the Clicks chain delivered strong turnover and profit growth in an environment of growing pressure on consumer disposable income, driven mainly by the higher demand for beauty and personal care products.
The Clicks ClubCard loyalty programme grew membership to 11 million, adding 1 million new members in the past year. ClubCard customers contribute 82% of sales in Clicks.
On the outlook for the second half, Engelbrecht said consumer spending would likely remain constrained due to inflationary cost pressures, and the environment might be impacted by disruption ahead of the general election in May and the resumption of load shedding.
BUSINESS REPORT