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.

Accessible and expanding pharmacy network
720 pharmacies in Clicks stores
  • Currently 51% of the population live within 5.0 km of a Clicks pharmacy
  • Retail pharmacy market share goal of 30% in the long term (2024: 24.2%)

Convenient and growing retail footprint
936 Clicks stores
  • Targeting to open 40 – 50 Clicks stores each year
  • 76% 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
  • Retail offering supported by Sorbet beauty salon franchise chain

Market leadership
Businesses occupy market-leading positions in health and beauty
  • Clicks is the largest retail pharmacy chain in South Africa, supported by a sizeable network of primary care clinics
  • UPD is the country’s leading national full-range pharmaceutical wholesaler

Significant organic growth prospects
  • Goal to expand Clicks store base to at least 1 200
  • Aim to open a pharmacy in every Clicks store in South Africa
  • Accelerate the rate of new store and pharmacy openings
  • Develop new pharmacy and retail formats to drive growth, including the rollout of a specialist pharmacy model
  • Expand specialist baby standalone and in-store presence
  • Extend existing presence in southern Africa and evaluate new markets

Differentiated product offer
Private label and exclusive brands offer differentiated ranges at higher margins
  • Target to grow private label to 35% of front shop retail sales; currently 25.4%
  • Clicks offers differentiated products through exclusive health and beauty brands such as The Body Shop, GNC and Sorbet

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
  • Well positioned to offer an affordable and accessible self-funding alternative to public healthcare
Growing personalisation and engagement
ClubCard is one of the largest retail loyalty programmes in South Africa
  • 11.8m active ClubCard members generate 81.7% of sales
  • Online store offers full Clicks product range for in-store collection or home delivery as well as online-only range extensions

Globally competitive trading margins
Clicks and UPD trading margins rank in the upper quartile of global drugstores and pharmaceutical wholesalers

Robust supply chain
Centralised supply from company-owned distribution centres (DCs) 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 with returns enhanced through active capital management
  • R18.9bn cash generated from operating activities before dividends paid over past five years
  • R10.2bn returned to shareholders in dividends and share buybacks in past five years
  • Well-invested store base and supply chain
  • R3.9bn capital expenditure in past five years
Sustainable business
Commitment to sound environmental, social and governance (ESG) practices
  • ESG practices aligned with nine selected United Nations Sustainable Development Goals
  • Multi-year inclusion in the FTSE4Good Index recognises the quality of the group’s ESG practices
  • R105m invested in alternative energy sources and solar storage
  • R812m invested in training and development over past five years
  • Experienced, diverse, transformed and balanced board