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Clicks plans R455m expansion

Health-care and supply retailer Clicks Group has set aside R455 million to spend on store expansion and information technology (IT) this financial year.

Chief executive David Kneale yesterday said the group had set itself a target of opening 600 stores in South Africa, which could increase with the number of shipping centres and malls opening in the country.

Kneale said the company would open its 500th store at the Mall of Africa in Midrand, which officially opens its doors next week. “Our plan is to open between 20 and 25 stores a year,” he said.

Kneale said the company wanted to concentrate its on operations in South Africa and had no immediate plans to increase its store base beyond its borders.

The company has 25 stores in neighbouring countries Namibia, Swaziland, Botswana and Lesotho. “(The stores in neighbouring countries) are doing well,” Kneale said. “We would like to open more but the focus at the moment is on South Africa.”

Clicks’s capital expenditure increased to R203m in the six months ended February 29 this year from R148m compared with the similar period last year.

The company said the capital expenditure would be used mainly for new stores and pharmacies, refurbishments and IT systems.

The group increased its turnover by 13.4 percent to R12.1 billion and retail sales shot up 13.4 percent, while subsidiary and pharmaceutical wholesaler United Pharmaceutical Distributors (UPD) increased sales by 12.8 percent.

Kneale said the increase in UPD’s turnover was as a result of the company’s implementation of an annual increase in the single exit price of medicines, which had resulted in customers buying in stock ahead of manufacturers’ price hike.

The single exit price is the price at which manufacturers must sell a medicine to all pharmacies.

Clicks’s operating profit increased by 14.4 percent to R732m.

Clicks shares fell 3.09 percent yesterday to close at R104.11.

The company said it was poised for growth despite the weakening outlook for consumer spending.

“The core health and beauty markets in which the group trades are relatively resilient to economic downturns,” Kneale said.

Yesterday’s results came days after Independent Community Pharmacy Association (ICPA) accused Clicks of anti-competitive behaviour and killing small-scale pharmacies.

ICPA, which represents independent pharmacies in South Africa, took Clicks to the Competition Commission arguing that it should not have had beneficial interests in retail pharmacy as the Pharmacy Act prohibited manufacturers of medicines from doing so.

Clicks owns medicine manufacturer Unicorn Pharmaceuticals.

But in its submission to the ongoing inquiry into the private health-care sector, Clicks last year accused ICPA of making incorrect submissions to the inquiry and denied that it was dominant in the pharmacy market, saying it had a market share of 18.41 percent.

Kneale said the Competition Commission had not yet contacted Clicks about the matter and the group had no power to exclude any competition. “Those allegations are entirely spurious,” Kneale said.

He said the group had, in fact, enhanced competition by making generic medicine available. “Clicks has made the pharmaceutical market more open and competitive.”


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