CLICKS GROUP EARNINGS UP 15% AS PROFIT EXCEEDS
Dividend increased by 18% to 380 cents per share
Cape Town – Clicks Group continued its strong growth momentum despite increasingly challenging trading conditions in the second half of the financial year to end August 2018 and grew diluted headline earnings per share by 15.1% to 578 cents.
Group turnover rose by 9.1% to R29.2 billion with operating profit increasing 12.6% to exceed R2.0 billion for the first time. The retailer generated cash inflows from operations of R2.5 billion and ended the financial year with cash of R1.5 billion.
Shareholders will receive a total dividend of 380 cents per share, 18% higher than last year, with the dividend payout ratio being raised from 60% to 62%.
Clicks Group was included in the FTSE/JSE Top 40 Index in June this year, reflecting the group’s consistent financial performance and growth in shareholder value over several years.
Chief executive David Kneale said retail health and beauty sales increased by 11.7% as volume growth accelerated over last year and Clicks gained market share in all product categories.
“This strong growth was achieved despite several headwinds. Consumer spending came under increasing pressure in the second half, selling price inflation declined to almost zero and the lower incidence of colds and flu compared to last winter depressed medicine sales,” he said.
Sales growth was driven by promotions in the current constrained consumer environment, with promotional sales increasing by 14.7% and accounting for 35% of the turnover in Clicks.
Clicks ClubCard increased active membership by over 800 000 to 7.8 million, with the loyalty programme comprising 77.2% of Clicks’ sales.
Clicks opened a record 41 stores during the year and expanded its store footprint to 663. The Clicks online store, which further enhances the convenience of the brand, performed well.
The Clicks pharmacy network was extended to 510 as 37 new pharmacies were opened. Clicks has increased its share of the retail pharmacy market to 23.3% and aims to grow this to 30% in the long term.
UPD, the group’s pharmaceutical distributor, also performed well to grow turnover by 8.4% and increase market share from 25.6% to 26.0%. UPD’s total managed turnover, combining wholesale and bulk distribution, increased by 8.9% to R17.9 billion.
Kneale said the group invested R671 million on new stores, pharmacies, store refurbishments, supply chain infrastructure and IT this year. Capital investment of R700 million is planned for the 2019 financial year.
Clicks Group announced last month that David Kneale will be retiring in January 2019 and stepping down as CEO after 13 years at the helm. He will be succeeded by Vikesh Ramsunder, the chief operating officer of the Clicks chain, who has served in numerous roles during his 25 years with the group, including being managing director of UPD from 2010 to 2015.
On the outlook for the 2019 financial year, Ramsunder said the current pressures on consumer spending are unlikely to abate in the months ahead and the retail trading environment will therefore remain challenging.
"We expect selling price inflation to remain low in the first half of the new financial year and the increase in the single exit price of medicine for 2019 is likely to be only marginally higher than in 2018.
The group’s core health and beauty markets and business model are resilient. The business continues to trade well in these challenging economic conditions and management is confident of maintaining sales momentum and sustaining volume growth in the year ahead", said Ramsunder.