Investment case

Clicks Group offers sustainable long-term growth prospects for equity investors seeking non-cyclical exposure to the retail and healthcare sectors in South Africa.

This investment case should be read together with the group strategy report which outlines the group’s strategic objectives and drivers of longer-term growth.

Market leadership
Clicks has the largest retail pharmacy chain footprint in South Africa, with a sizable private network of clinics
  • UPD is the country’s leading national full range pharmaceutical wholesaler
Healthcare markets defensive and growing
Over 80% of group turnover is in defensive merchandise categories
  • Improving living standards, increasing urbanisation and longer life expectancy is contributing to a growing market for health and beauty products
  • Increasing proportion of the population is entering the private healthcare market
Globally competitive operating margins
Clicks and UPD operating margins rank in the upper quartile of global drugstores and pharmaceutical wholesalers

Convenient and growing retail footprint
Goal to expand Clicks store base to 1 200
  • Over 880 Clicks stores
  • 75% of stores located in convenience and neighbourhood shopping centres
  • Expanding store base to areas serving lower to middle income customers
  • Rolling out standalone specialist baby stores as showrooms to support online sales
  • Acquired the Sorbet beauty salon franchise chain comprising 194 stores
  • Targeting to open 40 – 50 Clicks stores each year
Accessible and expanding pharmacy network
Aim to operate a pharmacy in every Clicks store in South Africa
  • 711 pharmacies in Clicks stores
  • Currently 50% of the population live within 5.1km of a Clicks pharmacy
  • Targeting to open 40 – 50 pharmacies each year
  • Retail pharmacy market share goal of 30% in the long term (2023: 24.0%)
Growing personalisation and engagement
ClubCard is one of the largest retail loyalty programmes in South Africa
  • 10.4 million active ClubCard members generate 80.2% of sales
  • Online store offers full Clicks product range for in-store collection or home delivery as well as online-only range extensions
Sustainable business
Commitment to sound environmental, social and governance practices
  • ESG practices aligned with eight selected United Nations Sustainable Development Goals
  • Inclusion in the FTSE4Good Index recognises the standard of the group’s ESG practices
  • R78.5 million invested in alternative energy sources and solar storage
  • R771 million invested in training and development over the past five years
  • Experienced, independent, diverse and well-balanced board
Differentiated product offer
Private label and exclusive brands offer differentiated ranges at higher margins
  • Target to grow private label to 30.0% of retail sales; currently 25.2%
  • Clicks offers differentiated products through exclusive health and beauty brands such as The Body Shop, GNC and Sorbet
Robust supply chain
Centralised supply from company-owned distribution centres to all retail stores
  • UPD provides an efficient healthcare supply chain channel for Clicks
  • UPD also offers wholesale and distribution services to pharmaceutical manufacturers
Efficient cash and capital management
Highly cash generative business
  • R17.7 billion cash generated from operating activities before dividends paid over past five years
  • Returns enhanced through active capital management
  • R8.9 billion returned to shareholders in dividends and share buy-backs in past five years
  • Well-invested store base and supply chain
  • R3.7 billion capital expenditure in past five years