Chief executive officer’s report

2025 proved to be a challenging year as the early promise of an improved trading environment did not materialise. Despite this, the group once again demonstrated the resilience of its core product offering and delivered a strong operational and financial performance in a constrained trading environment. The performance was driven by our defensive business model, results orientation, brand strength and the loyalty of more than 12 million ClubCard customers.

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As a value retailer, Clicks is well positioned to leverage its market-leading shares in defensive retail categories. Customers responded favourably to our product and pricing offers, resulting in market share gains across core health and beauty categories.

Delivering on our strategy

Our retail growth strategy, which is built on the pillars of value, convenience, differentiation and personalisation, continued to be consistently applied in the past year. We believe this strategy, supported by favourable market dynamics, positions the group to capitalise on organic growth opportunities and maintain a competitive advantage in the health and beauty markets in which we operate.

The group continued to make pleasing progress in expanding its store footprint towards the medium-term target of 1 200 stores, exceeding both our store and pharmacy opening targets for the year. Clicks increased its store base to over 990 following the opening of a net 55 new stores, with convenience format stores now comprising 77% of the portfolio. Clicks has accelerated its store presence in lower-income areas, with 25% of stores now located in these areas and contributing 23.7% of turnover.

Outside South Africa, five new stores were opened in the neighbouring countries to bring our store base to 58 across Namibia (26), Botswana (24), Eswatini (6) and Lesotho (2).

The rate of pharmacy openings accelerated in the second half of the year as Clicks opened a net 60 new pharmacies, including 29 in the last quarter of the financial year. This contributed to our retail pharmacy market share increasing to 24.0% (2024: 23.8%).

Clicks continues to be voted as the customers’ first choice retail pharmacy and we are committed to delivering quality, affordable and accessible healthcare through our convenient network of 780 pharmacies. Currently 53.2% of the country’s population live within a five-kilometre radius of a Clicks pharmacy, highlighting the convenience of the pharmacy network. The number of primary care clinics within pharmacies has been increased to 225.

We have developed a specialised 24-hour large pharmacy format under the UniCare brand. M-Kem, the 24-hour pharmacy in the Western Cape acquired in 2023, has been rebranded as the first UniCare pharmacy. In the new financial year we plan to expand the UniCare network with two greenfields locations and two acquisitions. Over the medium term we expect to open 10 to 15 UniCare pharmacies around the country.

Clicks entrenched its leading position in the baby category, growing market share to 23.1% (2024: 22.3%). The Clicks baby strategy integrates private label and online offerings, specialist baby stores and store-in-store concepts, competitive pricing and Baby ClubCard benefits. In the past year Clicks Baby standalone stores increased sales by 23%, store-in-store sales grew by 12% and online sales increased by 27%.

2025 marked the 30th anniversary of the launch of the Clicks ClubCard, the first retail loyalty programme in Africa. ClubCard has consistently been voted as South Africa’s most used rewards programme. This year, loyal shoppers were rewarded with R855 million in cashback, supported by our 14 ClubCard affinity partners. Over the past three decades, R7.5 billion has been paid to customers in ClubCard rewards. The generous rewards and benefits have increased the membership of the programme to 12.6 million. ClubCard contributed 82.6% of sales in Clicks, accounting for 80.7% of front shop sales and 87.4% of pharmacy sales.

Our private label strategy aims to increase customer choice by offering an extensive range of trusted, high-quality, great value products that are a compelling alternative to branded products.

Today, one in every three products sold in the front shop is a Clicks-branded product or exclusive brand. Private label sales grew by 10.7%, ahead of the overall sales growth in Clicks, and contributed 25.9% of total sales. The quality and innovation supporting these products was recognised in the SA Product of the Year Awards 2025 where six of our private label products won their respective categories.

Sorbet enhances the group’s positioning as a beauty destination for higher LSM customers. As the largest and most recognisable professional beauty salon brand in the country, Sorbet operates 190 franchised and 14 company-owned salons. In addition, our equity investment and affinity partnership with ARC stores, a premium beauty retail format, provides access to the premium beauty customer segment.

The group’s financial performance is covered in the chief financial officer’s report, and the trading performance of Clicks and UPD.

UPD positioned for growth

UPD provides the distribution capability for the group’s healthcare strategy and is the country’s leading full-range pharmaceutical wholesaler. UPD also has a significant bulk distribution agency business. Following the completion of a large-scale systems implementation project, UPD’s performance continued to stabilise during the year, supported by improved financial, operational and customer service metrics which contributed to increased turnover and trading profit.

Total managed turnover, combining wholesale and bulk distribution, increased by 2.0% to R30.5 billion. Clicks and the private hospital groups are the core distribution channels and account for over 94% of UPD’s wholesale turnover, supporting the long-term sustainability of this business. UPD’s trading performance is covered here.

In line with its commitment to carbon neutrality, UPD introduced South Africa’s first fleet of zero-emission, pharma-compliant electric delivery vehicles. A fleet of 42 vehicles, equipped with solar-powered refrigeration, currently serve customers across Gauteng and the Western Cape. A further 40 electric vehicles will be added to the fleet in the new year.

Advancing our healthcare agenda

We remain committed to advancing our public healthcare agenda of extending access to affordable healthcare to all. The convenience and scale of our pharmacy and clinic network, together with our virtual doctor service and partnerships with healthcare funders, demonstrates the progress we are making.

Our collaborative engagement with the Department of Health to advance our healthcare agenda is delivering positive outcomes, and we extend our appreciation to the Department for their support in accelerating the issuing of pharmacy licences which is enabling our pharmacy expansion programme.

Embracing diversity and empowerment

As a group, we proudly embrace inclusive transformation with a strong emphasis on gender diversity and local empowerment. This is reflected in our BBBEE level 3 rating and our Top Achiever status in the United Nation’s Women’s Empowerment Principles where we improved our leadership position to 89%.

The group’s inclusion in the globally recognised FTSE4Good Index for the past nine years is an independent endorsement of the progress we have made in advancing sustainability, as is our industry-leading FTSE/Russell ESG score of 4.2.

Sustainability management and environmental, social and governance (ESG) practices are integrated into our strategic planning and operational processes, with ESG metrics being applied as downward modifiers in our incentive schemes. Refer to the sustainability report here.

Strategy and outlook

While the improvement in South Africa’s macroeconomic indicators is encouraging for retail spending over the medium term, consumer sentiment and discretionary spending are expected to remain under pressure in the short term. The group is well positioned in this environment due to its competitive advantage in the defensive health and beauty markets.

In the year ahead we aim to leverage the recent investments in Sorbet, ARC stores, UniCare and the LEAP pharmacy system while continuing to invest in enhancing our omni-channel capability.

Clicks plans to open 40 – 50 stores and 40 – 50 pharmacies in the new year as we move closer to our medium-term target of 1 200 stores.

Private label remains the primary driver of the group’s differentiation strategy. We aim to sustain the strong growth momentum in private label and exclusive brands, targeting a 35% contribution to front shop sales in the medium term.

In UPD, the improved purchasing compliance from both Clicks and the private hospital groups as well as the stabilisation in performance metrics has created positive momentum for the 2026 financial year.

Our extensive store network and integrated supply chain provide competitive advantages which we aim to maintain through capital investment of approximately R1.3 billion in each of the next three years.

Our group executive team has been expanded to eight members to support the growth and increasing scale of the business while also planning for senior leadership succession. The performance track record, sector experience and complementary diversity profile of the expanded group executive team has significantly strengthened our leadership capability. Refer to executive management.

We believe that the group’s market-leading positions in the health and beauty sectors, long-term organic growth opportunities in Clicks and the increasing scale of the business, supported by strong cash generation and a robust balance sheet, should ensure that the group continues to deliver on its medium-term financial targets.

Appreciation

The resilience of our business model, and of our people, has been thoroughly tested over the past year, making our performance all the more commendable. It reflects the unrelenting focus on excellence by our teams.

On behalf of the board, I extend my gratitude to our group executive team for their leadership, and to management and staff across the business for ensuring that we strengthened our position as South Africa’s leading health and beauty retail group.

The year ahead will undoubtedly bring challenges but will also present abundant opportunities. I look forward to your continuing support and commitment as we strive to exceed the expectations of all our stakeholders.

Bertina Engelbrecht
Chief executive officer

6 November 2025