Musica continues store closures

·25 Apr 2013

Clicks Group says that its music and entertainment retailer, Musica, performed well in results for the six months ended February 2013, and this despite the net closure of eight stores.

Clicks Group, which also includes retail brand, The Body Shop, recorded an 11.5% rise in revenue to R8.94 billion, while operating profit of R531.388 million, was up by 8.7%.

Diluted headline earnings per share of 142.7 cents per share, was also up 8.5% from 2012.

The group’s interim dividend was increased by 10.0% to 48.5 cents per share.

Clicks said that constrained consumer spending resulted in slower revenue growth, compounded by relatively low selling price inflation.

Retail costs increased by 6.7% despite the continuing investment in pharmacy, stores and IT systems, the group said.

“Musica increased operating profit by 27.3% through tight cost management. The brand continued to gain market share in CDs and DVDs, despite the net closure of eight stores,” Clicks said.

Musica turnover declined to R501.63 million, from R504.91 million before, while pre-tax profit improved to R46.896 million, from R36.84 million in 2012.

Musica’s capex increased to R8.46 million, from R2.19 million, Clicks said.

The arrival of several music download services in South Africa in recent months, led by Apple’s iTunes Store has thrown into question the longevity of music retailers.

In a recent interview with BusinessTech, the group said that it is optimistic that the arrival of iTunes in South Africa will complement its offering and stimulate the local music industry.

Looking ahead, Clicks said that the retail environment will remain tough for the Clicks chain and selling price inflation is expected to average 4% – 5% for the second half of the year.

In these conditions the focus will be on driving revenue growth, maintaining margin and containing costs.