Listed pharmacy group Clicks says following the declaration of the state of disaster in South Africa in response to the Covid-19 pandemic and the subsequent announcement of the national lockdown, it experienced ‘unprecedented’ levels of sales demand, particularly in hygiene and healthcare products.
However, as was to be expected, this trend has since reversed during the lockdown period.
Clicks said it continued its strong growth trend and delivered a highly competitive performance for the six months ended February 2020, against a background of low economic growth,constrained consumer spending and extensive trading disruption due to electricity load shedding.
- Group turnover up 9.9% to R16.9 billion.
- Retail health and beauty sales up 9.6%.
- Total income grew by 8.2% to R4.6 billion.
- Group operating profit increased by 9.4% to R1.2 billion.
- Diluted headline earnings per share up 14.4% to 338 cents.
Clicks said that owing to the economic upheaval arising from the Covid-19 pandemic, the board has decided to preserve cash and consider an annual dividend at year-end once there is greater certainty.
Retail health and beauty sales, which includes Clicks and the franchise brands GNC, The Body Shop and Claire’s, increased by 9.6%, driven by competitive pricing, differentiated product ranges, the Clicks ClubCard and new stores.
Retail expenses grew by 7.3% as the group said it invested in a net 41 new Clicks stores and 44 new pharmacies over the past 12 months.
Clicks said it opened 17 stores in the six months to expand its retail footprint to 721 stores and increased its pharmacy network to 572 following the opening of 27 pharmacies.
The group said that turnover for the seven weeks to 19 April 2020, which includes the first 24 days of the lockdown period, increased by 15.9%.
Looking ahead, Clicks said that trading conditions are expected to be extremely tough for the remainder of the financial year as the extent and economic impact of the Covid-19 pandemic are unknown.
“This could be compounded by electricity load shedding which remains a risk to retail sales, particularly in the higher-demand winter season. The recent sharp depreciation in the value of the rand could impact on selling price inflation towards the end of the financial year and place further pressure on constrained consumers,” it said.
Clicks said its business has a robust balance sheet, generates strong cash flows and plans to open 38 new Clicks stores and 40 pharmacies in the financial year.