Clicks surges as it ups full-year profit by a third

Retail-led healthcare group Clicks on Thursday reported a 33.5% rise in profits for the year ended August 2022, with group diluted headline earnings per share (Heps) increasing to 1 032.7 cents, up from 773.6 cents in the previous period – bumped up by a strong recovery in the beauty category, tighter controls on costs and strong cash flows.

The robust full-year performance saw the group’s share price surge by over 7% in morning trade.

The JSE-listed pharmaceutical, electronics and baby retailer further reported a 6% strengthening in group turnover to R39.6 billion for the period, while retail turnover grew 11.7% despite the impact of the July civil unrest which gripped parts of KwaZulu-Natal and Gauteng in 2021.

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The group also generated cash inflows from its operations of R4.3 billion, aiding a dividend increase of 30% to 637 cents for the period.

Return on equity rose from 38.2% to 48%, placing it at the upper end of the group’s medium-term target range of between 40% and 50%.

“The performance for the year highlights the resilience of the group’s business model and the defensiveness of our core retail categories,” CEO Bertina Engelbrecht said in a statement. 

Expansion

Despite the group facing challenges linked to the July 2021 civil unrest, persistent load shedding and mounting pressure on SA consumers’ disposable income, it has kept up with its aggressive expansion plans.

Clicks increased its retail footprint to 840 stores during full-year, an increase of 58 stores from the previous period, while its national pharmacy presence increased to 673, translating to 52 more pharmacies than it had in the last comparable period.

Looking forward, the retailer upped its expansion ambitions, announcing a long-term target of opening 1 200 stores, which would mean launching 40 to 50 new stores and the same number of pharmacies each year.

To support these plans, the group says it plans to dedicate R936 million in capital investment in the new financial year.

The record investment will go towards strengthening the group’s footprint expansion plans (R477 million) as well as its operations in terms of supply chain, technology and infrastructure (R459 million).

“Clicks has proven its ability to adapt to changing market dynamics. Our main growth drivers are value, convenience, customer loyalty and product differentiation and this positions the business to respond to the needs of customers, particularly in the current weak economic environment,” Engelbrecht said.