Clicks talks expansion plans as it acquires its first 24-hour pharmacy in South Africa
Clicks Group plans to open 50 new stores and 40 pharmacies in 2023 and has acquired its first 24-hour pharmacy in the Western Cape.
Clicks published its unaudited interim results for the six months ended 28 February 2023 on Thursday (20 April), highlighting its plans for the full-year 2023 on the back of positive results.
Over the reporting period, the Group expanded its retail footprint to 861 stores, opening 21 new stores in the first half of the year. A further 18 pharmacies were opened, extending the national pharmacy presence to 691.
More interestingly, Clicks noted that after the end of the reporting period, the Group acquired M-Kem, a long-established 24-hour pharmacy in Bellville, Cape Town. This will be Clicks’ first 24-hour pharmacy in South Africa.
In addition, the Group also said it plans to open 50 new stores and 40 pharmacies across the country for the full financial year and remains committed to its longer-term target of 1,200 stores.
The Group noted a record capital investment of R958 million for 2023, including R477 million for new stores and pharmacies and the refurbishment of 45 stores. R481 million will be invested in the supply chain, technology and infrastructure, including battery storage at its pharmaceutical distributor (UPD) ‘s main distribution centre.
Clicks delivered strong turnover and profit growth despite increased load shedding and mounting pressures on consumer disposable income – reporting market share gains in all product categories against the comparative six-month period.
Group turnover increased by 6.8% (excluding vaccinations) to R20 billion, retail turnover increased by 11.9%, and adjusted total income grew by 8.1% to R5.8 billion.
Headline earnings grew by 0.9% to R1.2 billion, while earnings per share declined by 4.2% to 472.1 cents, with diluted HEPS increasing by 1.1% to 472.2 cents. Additionally, Distribution costs increased by 13.3% due to higher fuel, security and insurance costs, load shedding, and increased employment costs to maintain service levels.
Despite this, the Group returned R1.1 billion to shareholders in dividend payments. It approved an interim gross ordinary dividend increase of 2.8% for the period ended 28 February 2023 of 185.0 cents per share (2022: 180.0 cents per share).
“Growth in Clicks was driven by the sustained post-Covid recovery in the beauty and personal care categories, supported by the Clicks ClubCard loyalty programme, which passed the 10 million active member milestone. Clicks Group again proved the resilience and defensiveness of its core retail business in challenging trading conditions,” the Group said.
Regarding the outlook for 2023, management expects trading conditions to remain extremely constrained owing to high inflation levels, placing pressure on consumer disposable income while load shedding will continue to disrupt trading patterns.
However, the directors forecast that the Group’s earnings for the financial year ending 31 August 2023 will exceed the 2022 financial year.
This forecast is based on the assumptions that the trading environment will remain constrained in the second half of the 2023 financial year, with continued high levels of consumer inflation and trading disruption caused by electricity load shedding and no changes in the regulatory environment, the Group said.