Clicks Group increased earnings by 14% as all of its brands grew market share
All brands gain market share
JSE-LISTED health-care and supply retailer Clicks Group yesterday said it had increased its earnings by 14 percent for the year ended August, buoyed by a strong showing from its retail brands as its customerfocused strategy paid off.
Clicks’ shares rose 0.91 percentage to close at R122.96 on the JSE yesterday.
The group owns brands such as Clicks, GNC, The Body Shop, Claire’s, Musica and pharmaceutical wholesaler UPD.
Clicks chief executive David Kneale said the good performance by the company’s retail brands was due to all brands strengthening their competitive positions and reporting market share gains.
“We will trade through this tough environment by providing value to customers and managing our costs efficiently,” Kneale said.
He said the group had created more than 1 200 jobs over the past year to improve customer service.
Clicks’ ClubCard added 1 million new members in the year under review to total 6.2 million active customers.
Sales from GNC, Clicks and The Body Shop gained by 13.5 percent for the year. UPD grew its turnover by 6.1 percent. Sales from Musica were not mentioned in the results statement. Approximately R433 million was invested in new stores and pharmacies and refurbishments.
New stores The company had increased its outlets to 511 stores, with 25 new stores added during the year, as well as 400 pharmacies, with 39 in-store pharmacies added during the year. The company said it planned to spend R577m in the 2017 financial year to roll out 20 to 25 new stores and 30 to 35 new pharmacies.
The company returned R876m to shareholders through dividends and share buy-backs.
Group turnover for the year under review increased by 9.5 percent to R24 billion, diluted headline earnings per share increased by 14.2 percent to 438.5 cents.
The group’s return on equity was 49.2 percent. Total income increased by 11 percent, with the group’s total income margin having improved by 30 basis points to 26.3 percent – the company attributed this to the impact of a favourable mix with the faster growth in retail. The operating profit grew by 12.6 percent to R1.6bn, and inventory days in stock saw an improvement from 68 to 66 days.
The total dividend increased by 15.7 percent and a final gross ordinary dividend of 196c per share and 27.2c per ordinary share was declared and would be paid out in cash.
These results come on the back of the group making significant investments over the past few months.
In June, Clicks and South African health-care company Netcare revealed the terms of a partnership that would see Netcare outsource its 37 retail pharmacies in Medicross medical and dental clinics and 51 Netcare hospital retail operations to Clicks.
And last month, Clicks and parcel delivery company Pargo announced an agreement that would see customers being able to collect and return their purchases from Clicks stores countrywide.
Kneale said the company had good cash reserves and had increased its cash revenue operations. “The group remains cash generative and increased inflow from operations to R1.85bn,” he said.
Alec Abraham, a senior equity analyst at Sasfin Wealth, said the company’s results pointed to the group’s aggressive promotion of its goods and adding more members to its ClubCard.
“The group is promoting its goods very heavily and that is what’s driving sales. It is also opening many new stores and pharmacies and adding an extra million members to the Clicks ClubCard,” Abraham said. The planned listing of Clicks’ rival Dis-Chem would not make a significant dent on the company’s future earnings, he said.
“The listing would not impact the competition Dis-Chem provides to Clicks on a operational level – the two companies have been competing for years – the only impact is that investors would have another option to invest in.”