Clicks sales grow 14.2% despite tough conditions

JSE-LISTED pharmacy retailer Clicks yesterday reported that sales growth at its chain stores had grown 14.2 percent in the half-year to January, underscoring the success of the company’s promotional offer and loyalty programme among cash-strapped consumers.

Chief executive David Kneale said Clicks appealed to cash-strapped consumers.

“Sales continue to be driven by our strong promotional offer, with the ‘3 for 2’ promotion on Christmas gifting again proving highly attractive. We are also encouraged by the incremental sales from our online store over the festive season.

“Inflation is expected to moderate further in the months ahead, particularly in UPD, which will be impacted by the recently announced SEP increase of only 1.26 percent for 2018”.

Kneale said he was confident about the company’s fundamentals.

“While we are also not anticipating any easing of the financial pressure on the consumers, we remain confident in our ability to trade through these challenging market conditions, as demonstrated by our recent performance,” he said.

Low confidence The results come as consumer confidence remained low and the Reserve Bank last week forecast that the gross domestic product for 2018 and 2019 would grow by 1.4 percent and 1.6 percent respectively.

Damon Buss, an equity analyst at Cape Town-based Electus Fund Managers, insists that the numbers highlighted consumers’ hunt for value.

“Clicks’ loyalty programme is one of the best in South Africa’s retail sector. The value of the ‘3 for 2’ promotional strategy is very attractive, es- pecially to cash-strapped consumers,” he noted.

Buss also said the group had posted strong sales volume growth (3.7 percent), driven by strong volume growth of 4.8 percent in the core Clicks stores.

“The group is delivering the best sales growth momentum of the SA retailers,” he said, although he expects Clicks’ sales growth trajectory to slow in the second half of the 2018 financial year due to lower inflation (especially in the distribution business) and a harder base (ie second half of 2017 financial year group sales grew 13.3 percent).

“Amid the consolidation in the pharmacy retail sector, Clicks will continue to grow ahead of the market.”

Clicks, which operates Musica, The Body Shop and UPD, the group’s pharmaceutical wholesale and distribution business, posted an 11.3 percent growth in group turnover to R11.1 billion during the period under review.

Retail group sales strengthened 13 percent and 6.7 percent on a comparable store basis, while the selling price inflation was at 3 percent.

UPD’s turnover increased 11.6 percent, ahead of selling price inflation, which averaged 6.2 percent for the period.

Clicks shares rose 0.77 percent to close at R174.99 on the JSE yesterday.