Clicks Group increased diluted headline earnings per share by 16.8% to 672 cents in the year to August 2019, as the retail and distribution businesses both delivered strong performances in an environment of low economic growth and challenging trading conditions.
The group increased its total dividend by 17.1% to 445 cents per share, with the dividend payout ratio being increased from 62% to 65%.
Over the past 10 years the group has generated a compound annual total shareholder return of 28.6% per annum. Diluted HEPS has grown by a compound rate of 15.0% per annum and the dividend per share by 18.1% per annum over the past decade.
Group turnover grew by 7.2% to R31.4 billion. The operating margin expanded by 40 basis points to 7.4% as operating profit grew by 14.2% to R2.3 billion.
Chief executive of the Clicks Group, Vikesh Ramsunder, said retail health and beauty sales increased by 10.5% on good volume growth as Clicks gained market share in all core product categories. The growth was driven by competitive pricing, a differentiated product offer and new stores, he said.
Clicks opened its 700th store in August 2019, ending the financial year on 704 stores as 41 new outlets were opened in the past 12 months.
“51% of the country’s population now live within 5 kilometres of a Clicks store, highlighting the convenience of the chain. Our online store extends customer convenience and is currently the fastest growing Clicks store. This has enabled Clicks to enter product categories that we prefer to sell online only, including premium beauty, health mobility and baby hardware such as prams, car seats and cots,” said Ramsunder.
Clicks extended its pharmacy network to 545 with the opening of 35 new dispensaries during the year. Clicks increased its share of the retail pharmacy market from 23.9% to 24.9% at the end of August 2019, “with one in four medicines sold in South Africa today being from a Clicks pharmacy,” commented Ramsunder.
Clicks ClubCard membership increased to 8.1 million, with the loyalty programme accounting for 78% of sales in Clicks. In the past year R504 million was paid to customers in cashback rewards.
UPD, the group’s pharmaceutical distributor, increased total managed turnover by 17.6% to R21.1 billion. The business gained four new distribution contracts during the year, expanding its portfolio of bulk distribution clients to 30. UPD increased its share of the pharmaceutical wholesale market from 26.0% to 27.0% at August 2019.
Cash generated by the group increased by 19.5% to R2.9 billion. Cash resources increased by R1.1 billion and the group ended the year with cash of R2.6 billion.
The group returned R1.2 billion to shareholders in dividend payments and share buy-backs, bringing the amount returned to shareholders over the past 10 years to R7.4 billion.
In February 2019 the final tranche of Clicks Group’s highly successful broad-based BEE employee share ownership scheme vested. Over the past two years R2.8 billion has been paid out to staff, an average of R355 000 per participant. This contributed to Clicks Group again being recognised as the top employer in the retail sector in SA by the Top Employers Institute.
On the outlook for the 2020 financial year, Ramsunder said the consumer spending environment will remain highly constrained. “The Clicks Group has adapted well to trading in this protracted economic downturn and we are confident of sustaining volume growth in the year ahead.”
“Our business operates in defensive, resilient and growing health and beauty markets where our market-leading brands are well positioned to increase market share,” he said.