STRONG RETAIL SALES DRIVE 15% EARNINGS GROWTH IN CLICKS GROUP
Cape Town - Clicks Group performed well in an environment of constrained consumer spending and increasing financial pressure in the six months to February 2016, with group turnover up 13.4% to R12.1 billion and diluted headline earnings per share increasing 15.1% to 204.4 cents.
The interim dividend was increased by 16% to 76 cents per share as the group reported a sector-leading return on equity of 53.6%.
Chief executive, David Kneale, said the group’s retail businesses produced excellent trading performances, particularly over the festive and holiday season.
Retail health and beauty sales, including Clicks and the franchise brands of The Body Shop, GNC and Claire’s, increased by 14.1% for the six months.
"Customers responded positively to our strong value offer and innovative product ranges. This resulted in good volume growth and increased market shares across all of our core merchandise categories,"" he said.
Musica increased sales by 3.4% and continues to gain market share in all product categories.
UPD, the group’s pharmaceutical distribution business, grew turnover by 12.8%, with good growth from its core customers.
Following the opening of 10 new stores and 23 new pharmacies, the Clicks footprint was expanded to 496 stores with 384 pharmacies. This includes 25 stores outside South Africa.
Clicks attracted almost one million new ClubCard members in the past year following the successful relaunch of the loyalty programme, bringing total membership to 5.7 million active customers.
The group remains highly cash generative and increased cash inflow from operations by 11% to R888 million. Almost R700 million was returned to shareholders through dividends of R406 million and share buy-backs of R290 million.
On the prospects for the remainder of the financial year, Kneale said the group is well positioned for continued growth despite the weakening outlook for consumer spending in the months ahead.
"The core health and beauty markets in which we trade are relatively resilient to economic downturns and Clicks offers great value which appeals to consumers."
He said Clicks has considerable scope for organic store and pharmacy growth in South Africa. "Next week we will achieve another significant milestone when we open the 500th Clicks store in the new Mall of Africa."
"The outlook for the business gives us confidence to continue investing for future growth and record levels of capital expenditure of R455 million have been committed for the year," he added.
The group is forecasting growth of 10% to 15% in diluted HEPS for the full financial year ending August 2016.