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Clicks shares soar as it clocks in higher market gains and earnings

| Retailer trading results

By Dieketseng Maleke - IOL

Clicks’ share price surged 8% yesterday after it reported record market share gains and a hike in earnings.

The shares traded at an intraday high of R267, but have decreased by 20.21% in the past year.

In its annual group results for the year ended August 31, 2023, the pharmaceutical retailer flagged that adjusted headline earnings increased by 11.5% to R2.5 billion, while retail sales grew by 12.2%.

The board declared a 6.6% higher dividend of 679 cents.

Clicks reported that retail turnover, excluding Covid-19 vaccinations, increased by 12.2% as group turnover grew by 8.2% to R41.6bn. Group operating profit, adjusted for the insurance recoveries related to the 2021 civil unrest, increased by 9% to R3.6bn, while the group’s adjusted operating margin increased by 30 basis points to 8.7%.

CEO Bertina Engelbrecht said Clicks grew market share in all core product categories in an environment of growing pressure on consumer disposable income. Clicks increased its share of the retail pharmacy market from 23.6% to 24.0%, with the front shop health market share increasing from 32.3% to 32.8%.

“This is a great set of results. I am super proud of our team. Some of the global shareholders have sent us congratulatory notes. We are confident that the organic growth opportunities in Clicks, together with the group’s strong cash generation and healthy balance sheet, should ensure that the group continues to deliver on its medium-term financial and operating targets,” she said.

Clicks expanded its retail footprint to 885 stores with the opening of a net 45 new stores.

“A further 38 pharmacies were opened, extending the national pharmacy presence to 711. Currently, 50% of the country’s population live within 5.1km of a Clicks pharmacy, highlighting the convenience of the pharmacy chain,” it said.

The group plans to open 40 to 50 new stores and pharmacies in the 2024 financial year, with the longer-term target of expanding to 1 200 stores.

Engelbrecht said the Clicks’ balance sheet was strong.

“I would say the balance sheet is extremely healthy. One of the reasons that we are such an attractive stock is we are highly cash generative, you’d have seen actually over the course of this year, income from total operations was R5.9bn.

“Although we invested in share buy-backs during the course of the year, on our capital investment programme, we still ended the year with cash on the balance sheet of just under R2.5bn. In all intents and purposes, we have a very strong balance sheet which, of course, is very positive because it means that we can fund our future growth without taking on any debt,” she said.

The group said it had successfully concluded three strategic acquisitions totalling R320 million.

“These businesses are the Sorbet beauty salon franchise chain of 194 outlets, M-Kem, a long-established 24-hour pharmacy in the Western Cape, and 180 Degrees, a pharmacy software development company,” it said.

Looking ahead, the group said it expected trading conditions to remain extremely constrained in the new financial year.

“The business model remains resilient and defensive, and the group has proven its ability to adapt to changing market dynamics.

“Management is confident that the organic growth opportunities in Clicks, together with the group’s strong cash generation and healthy balance sheet, should ensure that the group continues to deliver on its medium-term financial and operating targets,” it said.

BUSINESS REPORT

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