Strong Sales in Clicks as Profit Increases by 15%

Clicks Group increased operating profit by 15.4% to R1.8 billion in the year to August 2017, driven by strong retail health and beauty sales which grew by 14.7%.

Group turnover increased by 10.9% to R26.8 billion and diluted headline earnings per share by 14.5% to 502 cents. The group increased its operating margin by 30 basis points to 6.8%.

The retailer remains highly cash generative, with cash inflows from operations exceeding R2 billion for the first time.

The directors have shown their confidence in the group’s prospects by raising the dividend payout ratio to 60% and declaring a dividend of 322 cents per share, 18.4% higher than last year. Dividends have grown at an annual compound rate of 20.9% per annum over the past 10 years.

Chief executive David Kneale said the group delivered a resilient performance in tough retail trading conditions, evidenced by the robust health and beauty sales, strong cash generation and enhanced returns to shareholders.

“Clicks produced another strong trading performance, led by pharmacy and front shop health sales. Our customers continue to respond positively to the Clicks value promotions and differentiated product ranges, and the chain reported strong volume growth while gaining market share in all product categories,” he said.

Clicks ClubCard reached the milestone of 7 million active members and accounted for over 77% of sales in Clicks. “ClubCard is integral to our digital strategy which aims to complement our store experience and enable us to better understand and engage with our customers. Customer response to the Clicks online store has been most pleasing and we extended our digital offering with the launch of the Clicks mobile app in August.”

Clicks opened a record 111 stores during the year and expanded its store footprint to 622. The Clicks pharmacy network was increased to 473 following the opening of an additional 73 pharmacies. Clicks plans to increase its store base in South Africa to 900 in the longer-term, said Kneale.

UPD, the group’s pharmaceutical distributor, increased wholesale turnover by 12.1%, with market share increasing to 25.6%. Operating profit increased by 19.6% as the margin expanded to 2.7% which Kneale described as “world class by pharmaceutical wholesale standards”.

He said the group generated a total shareholder return of 25.2% for the year and created additional shareholder value of R7.5 billion from share price growth and dividend payments.

Discussing the outlook for the new financial year, Kneale said the retail sector will face headwinds as low economic growth and political uncertainty continue to dampen consumer confidence and constrain spending.

“The core health and beauty markets in which we trade are defensive and have proven to be relatively resilient in challenging trading conditions. We have shown our ability to trade our way through these tough conditions and believe our market-leading brands are well positioned to sustain growth in this environment.”

Kneale said the group is committed to investing for long-term growth and record capital investment of R680 million is planned for the 2018 financial year. This includes the opening of 25 to 30 new Clicks stores and 30 to 35 new pharmacies, with significant investment in the retail and pharmaceutical supply chain to support the increased scale of the group.

You may also like

Popular News