Clicks eyes expansion despite difficult times

Clicks has seen a slight profit increase amidst a challenging economic environment, with plans to add more stores and pharmacies.

In its financial results for the year ended 31 August 2023, Clicks said that it recorded market share gains in all core product categories, with solid growth in private label sales and a recovery in the beauty category. Clicks ClubCard Loyalty programme members also grew to 10.4 million active members.

Over the period, the group also finalised three takeovers worth R320 million – 194 Sorbet outlets, 24-hour pharmacy M-Kem and pharmacy software development company 180 Degrees.

UPD – the group’s pharmaceutical wholesaler – also saw an increase in imported turnover and profitability in the second half of the financial year, but the business was impacted by the smaller increase in the regulated single exit price (SEP) of medicines and operating challenges at its distribution centres.

Additionally, retail costs were impacted by growing insurance premiums and diesel costs, which increased by 11.4% with comparable retail cost growth of 7.4%. Distribution costs also grow by 13.4% due to the higher insurance, transport, diesel and employment costs.

Overall, the group’s diesel cost to run generators during load shedding grew to R53.8 million over the period.

Looking at the financials, the group’s total headline earnings, including insurance recoveries from the prior year following the 2021 unrest, grew by 0.8% to R2.5 billion.

Basic earnings per share, on the other hand, dropped by 3.5% to 1,042 cents, whilst diluted headline HEPS increased by 1.2% to 1,045 cents.

When adjusting for the insurance recoveries in the prior year, diluted HEPS actually grew by 11.5%.

Although the group’s profits only grew marginally, it upped its dividend by 6.6% to 679 cents per share.

Some of the group’s key financials can be found below:

Outlook

The group noted that trading conditions for the new financial year will likely be incredibly constrained but expressed confidence in its business model remaining resilient.

“Management is confident that the organic growth opportunities in Clicks, together with the group’s strong cash generation and healthy balance sheet, should ensure that the group continues to deliver on its medium-term financial and operating targets,” the group said.

“Clicks plans to open 40 – 50 new stores and 40 – 50 pharmacies for the financial year and remains committed to its longer-term target of 1,200 stores.”

“Capital investment of R880 million is planned for the 2024 financial year. This includes R487 million for new stores and pharmacies and the refurbishment of 50 – 60 stores. R393 million will be invested in supply chain, technology and infrastructure.”

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