South Africa: Clicks bucks retail trend with good fortune
Clicks’ bet on its home market is paying off: the listed health and beauty retailer has reported a healthy 20-week trading update.
In a domestic retail market increasingly characterised by warnings of deteriorating sales forecasts, store closures, and dwindling profits, the retail-led healthcare group continues to buck the trend. Clicks has demonstrated resilience, as its latest update to the market shows.
In the 20 weeks to 12 January 2020:
- group turnover rose 9.9% to R12.9bn;
- retail and health sales increased 9%; and,
- the distribution arm, UPD, recorded a 13.1% growth in turnover.
Clicks did particularly well in health and beauty products carrying its brand name.
In 2019, Clicks opened its 700th store, while its total number of outlets rose to 704 by the end of the year. In the same year, Clicks “increased its pharmacy network to 545 pharmacies”. It is now one of South Africa’s largest retail pharmacy chains.
Furthermore, the company deployed R647m ($43.45m) in capital expenditure which went towards the expansion of its store and pharmacy footprint, as well as refurbishments, supply chain, and information technology, according to a group market update published in August 2019.
The Clicks Group encompasses:
- Clicks, its health and beauty retail brand;
- The Body Shop;
- GNC, which it operates under an exclusive franchise agreement in Southern Africa entered into in 2014;
- Claire’s, which retails jewellery and accessories, and is operated by the group under an exclusive franchise agreement in Southern Africa entered into in 2015;
- Musica, its entertainment retail brand founded in 1992; and
- UPD, its pharmaceutical wholesaler that supplies products to “major hospital groups and more than 1,100 independent pharmacies”. Also, UPD “provides bulk distribution services to pharmaceutical manufacturers”.
In addition to South Africa, the group has 49 outlets spread across Botswana, Lesotho, Namibia, and Swaziland.
Health and beauty shining stars
Clicks Group Chief Executive Vikesh Ramsunder says the company’s latest positive figures were achieved despite mounting challenges in the operating environment.
He maintained the strong trading performance in the weak consumer economy demonstrated the resilience of the Clicks brand and the defensive nature of the health and beauty markets in which the group trades.
“Our wide range of gifting and value offering, supported by the convenience of the Clicks chain’s extensive retail and pharmacy footprint, ensured we maintained our robust sales momentum of recent years and sustained volume growth,” explained the chief executive.
“This was achieved despite the increasing pressures on consumer disposable income, negative sentiment and the serious impact of electricity load-shedding on retail trading hours and shoppers in general over the past two months.”
No market cheer
Despite its run of good retail fortune, the Clicks Group share price has trended lower on the Johannesburg Stock Exchange. In the past two weeks, it has traded nearly 5% less than its value since the publication of its trading update.
The group is scheduled to publish its interim results in mid-April.