Press Releases

EARNINGS UP 14% AS CLICKS GROUP POSTS RESILIENT PERFORMANCE IN COVID-19 CRISIS

Cape Town - Clicks Group delivered a strong and resilient performance in the Covid-19 environment, increasing diluted headline earnings per share by 13.7% to 754 cents for the year to August 2020. Earnings growth was driven mainly by tight cost management, solid retail health and beauty sales and the strong performance of UPD, the group’s pharmaceutical wholesaler.

Shareholders will receive a dividend of 450 cents per share, based on a dividend payout ratio of 60%.

Group turnover increased by 9.6% to R34.4 billion and profit after tax grew by 11.8%. After returning R1.5 billion to shareholders in dividends and share buybacks, the group’s cash balance totalled R2.2 billion at year end.

Chief executive Vikesh Ramsunder said the group delivered a strong and resilient performance against the background of a global humanitarian crisis and deepening economic recession locally.

"The performance of the past year, and particularly in the second half during the Covid-19 crisis, has again demonstrated that the group’s core health and beauty markets and business model are resilient," he said.

As essential healthcare service providers Clicks and UPD traded throughout the national Covid-19 lockdown, with restrictions on the sale of certain product categories in the early stages of the lockdown.

Retail health and beauty sales grew 8.4% as Clicks gained market share across most core categories. Growth was attributable to competitive pricing, differentiated products, new stores, strong online sales and the Clicks ClubCard, which grew membership to 8.6 million.

Ramsunder said trading patterns shifted as customer shopping behaviour changed in response to lockdown restrictions. "Consumers chose to shop closer to home and shop less frequently. Many stayed home and shopped online to reduce the risk of contracting Covid-19, opting for the convenience of home delivery. This contributed to our online store showing phenomenal growth of 361% for the second half, making it our largest and fastest growing store."

The convenience of the Clicks store network was also an advantage during the crisis. "We have 74% of our stores located in convenience and neighbourhood shopping centres which largely negated the significant slowdown in foot traffic at super regional and regional malls across the country."

Clicks opened 39 stores during the year to expand its retail footprint to 743 stores. The pharmacy network was increased to 585 following the opening of 40 pharmacies. "50% of the country’s population now live within 6 kilometres of a Clicks pharmacy," he said.

UPD grew turnover by 11.2% and continued to gain market share after securing new wholesale and bulk distribution contracts. Business to the private hospital and independent pharmacy channels grew strongly due to increased demand for medicines and healthcare products during the Covid-19 pandemic. UPD’s total managed turnover, combining wholesale and bulk distribution, increased by 11.7% to R23.6 billion.

On the trading outlook for the new financial year, Ramsunder said the consumer environment is expected to be extremely constrained in the year ahead.

"The continuing impact of Covid-19 and the socio-economic challenges arising from the lockdown, particularly the expected widespread job losses, will make the months ahead extremely challenging.

"Our business has traded well in weak consumer markets over an extended period and has adapted to the new market dynamics arising out of the Covid-19 crisis. The group has a robust balance sheet and generates strong cash flows, and we are confident of continuing to create value for our shareholders," he said.

Ends
Issued by Tier 1 Investor Relations on behalf of Clicks Group
For further information kindly contact
Graeme Lillie
Tier 1 Investor Relations
021 702 3102 / 082 468 1507