CLICKS SALES UP 13% ON STRONG GROWTH IN HEALTH AND BEAUTY
Cape Town – Clicks Group today reported an increase of 13.5% in diluted headline earnings per share to 232 cents for the six months to February 2017, driven by strong health and beauty retail trading.
The Clicks chain demonstrated its resilience by increasing sales 13.1% in the slowing consumer economy.
Group turnover increased by 8.5% to R13.1 billion and operating profit was 14.7% higher at R840 million. The group operating margin expanded by 30 basis points to 6.4% as both Clicks and UPD improved margins.
The interim dividend has been increased by 15.8% to 88 cents per share.
Chief executive David Kneale said Clicks gained market share in all core merchandise categories. "The Clicks chain is more price competitive than ever and pharmacy, front shop health and beauty all recorded double digit sales growth for the half year. The results were supported by buoyant Christmas trading where customers responded positively to our value promotions and differentiated product ranges," he said.
Clicks continues to expand its store network, reaching the 600 store milestone following the opening of a net 89 new stores. The Clicks pharmacy network was increased to 459. Clicks remains on track to achieve its goal of 800 stores in South Africa, said Kneale.
UPD, the group's pharmaceutical distributor, increased wholesale turnover by 9.6%, ahead of the pharma market growth of 5.6%, with market share increasing to 24.6%. The business delivered excellent growth in operating profit of 22.1% through efficient cost and inventory management.
Capital expenditure of R249 million was invested during the first half, mainly in new stores and pharmacies, store refurbishments, supply chain and information technology. The group has increased its capital investment for the financial year to a record level of R577 million to support the increased scale of the business.
On the outlook for the remainder of the financial year, Kneale said low economic growth, higher taxes and ongoing political turbulence will weigh negatively on disposable income and consumer sentiment in the months ahead.
"However, the health and beauty markets in which we operate have proven to be relatively resilient to economic downturns. In the current environment we are therefore focusing on delivering good value and convenience for our customers while controlling costs and managing cash efficiently to maximise returns for our shareholders."
The directors are confident of maintaining the current growth momentum and are forecasting an increase of between 11% and 16% in diluted HEPS for the full financial year to August 2017.