Clicks is pushing harder into retail pharmacies – and it’s paying off in a big way

Retail group Clicks has published its financial results for the year ended 31 August 2019, reporting a significant jump in revenue and profit on the back of its harder push into the local retail pharmacy market.

Group revenue was up 7.7% to R33.37 billion for the year, with turnover at R31.35 billion. Gross profits were up 8.5% at R6.7 billion, with total profit up 16% at R1.7 billion.

Headline earnings per share jumped by 12.2% to 683.9 cents, from 609.5 cents the year before.

The group declared a final gross ordinary dividend for the period of 327.0 cents per share (2018: 277.5 cents per share).

The group said that its retail expenses grew by 8.1% as it invested in 42 new health and beauty stores, 35 additional pharmacies and refurbished 56 stores. Comparable retail costs were contained to an increase of 5.6%, it said.

Clicks opened its 700th store in August 2019, ending the year on 704 stores, and increased its pharmacy network to 545 pharmacies.

It said that it increased its share of the retail pharmacy market from 23.9% to 24.9% in August 2019.

Retail health and beauty sales – which includes Clicks and the franchise brands GNC, The Body Shop and Claire’s – increased by 10.5%, driven by competitive pricing, a differentiated product offer and new stores.

Sales in comparable stores increased by 6.9% and showed strong volume growth of 5.8%, with inflation of only 1.1% for the year.

Clicks ClubCard active membership reached 8.1 million and accounted for 77.6% of the brand’s sales. In the past year R504 million was paid to customers in cashback rewards, it said.

Outlook

Clicks said that while the consumer spending environment will continue to be constrained in the year ahead, the group has adapted well to trading in this protracted economic downturn and is confident of sustaining volume growth in the year ahead.

“The group operates in growing and defensive health and beauty markets where the strategy and business model have proven to be resilient, ensuring that the group’s market-leading brands are well-positioned to increase market share,” it said.

On the consumer side, it said it expects selling price inflation to remain low in the first half of the 2020 financial year, with the prices of medicines being marginally higher.

It is also planning a capital investment of R718 million focused on its store and pharmacy network as well as retail and distribution infrastructure to support the increased scale of the business.

In early trade on Thursday (24 October), Clicks’ share price was at R239.17 per share. The group’s share price is up 25% from the start of the year.


Read: Pharmacy price war 2019: Dis-Chem vs Clicks vs Checkers vs Pick n Pay vs Spar

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Clicks is pushing harder into retail pharmacies – and it’s paying off in a big way