Sorbet expands into Botswana, Mauritius
Owner Clicks says good performance aided by customers using ClubCards
● Beauty salon Sorbet will soon open branches in Botswana and Mauritius after parent company Clicks received interest from franchisees in those countries, marking the entity’s first foray into countries outside South Africa.
Clicks bought the salon franchise chain, which has 194 stores across the country, a year ago for R105m.
“We have just been approached by potential master franchisees who have identified sites where they want to open Sorbet in Botswana and Mauritius. Sorbet is a brand that is known, and the economics make sense. People who really understand how to manage franchise businesses want to expand this brand,” Clicks CEO Bertina Engelbrecht said.
In the half-year to February, Sorbet recorded a 14.9% rise in turnover, lifted by Sorbet Man and its hybrid salons.
“Sorbet’s performance was ahead of expectations, and Sorbet Man is a phenomenal growth story,” Engelbrecht said.
The Clicks ClubCard loyalty programme was also boosting sales at Sorbet.
Clicks plans to spend almost R902m this year. This includes R514m on 50-55 new stores and 10-20 pharmacies, as well refurbishments of up to 60 outlets. A further R406m will be invested in supply chain, technology and infrastructure, including the company’s ongoing investment in renewable energy solutions.
The group now has 902 stores. However, the slower rollout of pharmacies in relation to stores is lower due to, among other reasons, government limitations on the number of pharmacy licences it is prepared to issue, either within a mall or based on the population size in an area, as well as ongoing discussions to resolve a long-standing dispute between independent pharmacies and Clicks’ medicine manufacturing plant, Unicorn.
In 2023, the Constitutional Court ruled against the Clicks Group, confirming the correctness of the position held by independents that owning a medicine manufacturing factory and pharmacies outright contravened the law.
The case, which was in court for seven years, was brought by the Independent Community Pharmacy Association over concerns Clicks pharmacists would be compelled to dispense drugs made by Unicorn.
In March 2023, the court found the Clicks
Group’s ownership of the Unicorn factory was in breach of the law, and ordered the department of health to determine appropriate sanctions. Clicks said the ruling did not prevent its pharmacies from dispensing Unicorn generic medicines.
Englebrecht said a decision on the matter is imminent. Discussions were now centred on the legal structure of the Unicorn business.
“We are awaiting approval of [the] Unicorn restructure from the department. The scheme has been reviewed, and it appears that what we have presented is acceptable. The first structure was not acceptable to the department of health, and we did some work on that.
“We have also been engaging with the regulatory authority to gauge with them, now that the resolution is imminent, what the process should be. [They] have assured they have all the licence applications that have been lodged and are ready to start as soon as formal approval is provided,” said Engelbrecht.
Clicks has lodged 58 new pharmacy licence applications. Despite the constraints in opening pharmacies, “we have grown market share ahead of anybody else, [and] that is all a consequence of improved services”, she said.
Clicks has 718 pharmacies. It said 51% of the country’s population lives within 5km of its pharmacies, highlighting the convenience of the chain.
In the next three to five years, it plans to open 15-20 more 24-hour pharmacies after the acquisition of M-Kem, a retail pharmacy in Bellville, Cape Town, that offers pharmaceutical/dispensary, clinical and beauty therapy services around the clock.
In the six months to February, Clicks increased its operating profit by 13.5% to R1.9bn. Retail turnover grew by 12.4%, with group turnover up 9% to R21.8bn, driven by strong growth in private label and beauty products, as well as improved performance by the Sorbet franchise, among other factors.
Private label sales were up 14.3% to 26.1% of total sales.
“Global counterparts are looking at anything between 35% and 45% of sales from private labels, so there’s still quite a lot of room for us to improve the private-label contribution.”
Clicks’ own brands have gained popularity across the full range of products, including electrical ones. Engelbrecht said Clicks baby nappies made up 38% of the total nappies sold in its stores.
The group is ramping up its online platform with the opening of a new unbranded store in Cape Town, with the aim of reducing delivery times.
Salome Maruma, senior investment analyst at Mergence, said the group delivered strong performance, and its store sales growth of 8.8% was ahead of apparel and food retail peers, “cementing its superior value proposition and the fact that it is favourably exposed to demographic and healthcare trends”.
Commenting on the outlook for the remainder of the year, Engelbrecht said that, in addition to the financial constraints facing consumers, the “trading environment could be further impacted by potential disruption ahead of the general elections in May and the resumption of load-shedding”.
Denker Capital equity analyst Muneer Ahmed expects Clicks’ strong performance to be carried through into the second half of the year.
“This is a very strong management team and resilient business, despite South Africa’s macro[economic] challenges and consumer pressures,” he said.
Sorbet’s performance was ahead of expectations, and Sorbet Man is a phenomenal growth story
- Clicks CEO Bertina Engelbrecht