Clicks Group earnings up 9.5% as operating profit passes R1 billion
Release Date: 2012/10/18
Cape Town – Clicks Group today reported a 9.5% increase in diluted headline earnings per share to 273.4 cents for the year to August 2012 as operating profit exceeded R1 billion for the first time.
The total dividend was increased by 21.6% to 152.0 cents per share while the return on equity is the highest in the retail sector at 59.9%.
Cash generated by operations (before interest and taxation) increased to R1.1 billion. The group returned R349 million to shareholders through distribution payments and share buy-backs while R256 million was invested in capital expenditure.
Chief executive, David Kneale, said middle income consumers in the Clicks target market have remained under financial pressure over the past year. “The health and beauty markets have been reliant on promotional activity to sustain sales volumes and attract value conscious consumers. As we had anticipated, selling price inflation has remained low.”
“In this environment the group has focused on staying competitive and maintaining tight expense control while continuing to invest for long-term growth,” he said.
Group turnover increased by 9.2% to R15.4 billion, with selling price inflation of only 0.5% for the year. Kneale said all the group’s businesses reported real sales growth in this low inflationary environment.
Clicks increased turnover by 9.2% and the chain gained market share in all key product categories. The Clicks ClubCard loyalty base grew by over 300 000 to 3.9 million active members. Clicks was this week again voted as the leading health and beauty retailer in The Times/Sowetan Annual Retail Awards.
The Clicks store footprint was expanded to 420 following the opening of a net 20 new stores and the pharmacy base was extended by 23 to 306 at year-end.
Musica increased operating profit by 36.3% and has continued to gain market share in CDs, DVDs and gaming.
The Body Shop increased turnover by 14.1% and grew operating profit by 15.9%.
UPD, the group’s pharmaceutical wholesaler, increased turnover by 11.1% and operating profit by 18.5%. Ten new agency distribution contracts were secured which helped UPD grow its share of the private pharmaceutical wholesale market from 23.1% to 24.3%.
On the outlook for the year ahead, Kneale said growth in consumer spending is expected to remain muted and selling price inflation is currently anticipated to remain at low single digit levels.
“The health and beauty markets will continue to be promotionally driven. Our focus in this trading environment will therefore be on growing sales volumes and containing costs.”
“Our brands are all market leaders and have proven track records of gaining market share. Based on the growth potential of Clicks and UPD, together with the group’s strong cash generating ability, we are confident of achieving our medium-term financial targets,” said Kneale.
Capital expenditure of R356 million has been committed for 2013 for new stores, new pharmacies, store revamps, IT systems and the expansion of UPD’s distribution infrastructure. Trading space is planned to increase by 4% to 5% in the 2013 financial year.