Clicks will spend R846 million capex as it expands store footprint across the country
Clicks, the JSE-listed health and beauty retailer yesterday, announced it would spend R846 million of capex in the new financial year for expansion of stores as it inches towards its target of establishing 900 stores in South Africa in the long term.
Dineo Faku | IOL
The group said this includes 25 to 30 new stores and 30 to 35 new pharmacies, in addition to the acquisition of 25 Pick n Pay pharmacies recently approved by the Competition Commission, as well as IT systems and supply chain infrastructure.
Chief executive Vikesh Ramsunder said the group was investing in growth and not fazed by South Africa’s slow economic growth rate.
“We believe in our strategy that there is long-term growth potential for the business in South Africa. It does not matter what has happened, it has not affected our ambition to keep on growing in the country so we will keep on investing,” Ramsunder said.
Clicks said turnover during the year ended August 202 jumped by 10.2 percent to R37.3 billion with health and beauty sales growing by 8.3 percent and distribution turnover increasing by 12.3 percent.
Adjusted group operating profit increased by 8.2 percent to exceed R3 bn, with the group’s operating margin 10 basis points lower at 8.2 percent.
Clicks said earnings growth would be 9 percent if an adjustment for the impact of civil unrest were to be taken into account.
The group reported that the civil unrest in KwaZulu-Natal had resulted in 53 stores and two of the group’s distribution centres being looted and damaged.
In terms of the group’s rewards scheme, Ramsunder said Clicks had signed 600 000 new members to ClubCard, its loyalty programme, during the year ended August 2021. He said the ClubCard active membership base increased to 9.2 million and accounted for 80.2 percent of sales in the year under review.
“We were the first loyalty programme in the country, and it is so simple, you do not have to jump through hoops, you just swipe and you save. Just by swiping your card you save two percent, and if you spend over R1 000 you save 4 percent, and earn double points. It is an absolute no-brainer that is why I have not interfered with the club card,” he said.
Ramsunder said Clicks was the largest vaccination provider in the private sector after administering 1.4 million jabs to date across 525 sites. He said the group would open more sites in order to get closer to the citizens of the country.
“We believe the one thing that will drive economic growth is a vaccinated population,” he said.
Commenting on the results, Anchor Capital’ investment analyst Seleho Tsatsi, said Clicks reported diluted headline earnings and a share growth of 3 percent.
“That number is below the run-rate we've come to expect from Clicks, which has been closer to a mid-teens earnings growth rate over the long-term,” he said.
The Clicks South African Special Risk Insurance Association claim is R726m.