GROUP STRATEGY AND BUSINESS MODEL

Clicks Group’s strategy is to create sustainable long-term shareholder value through a retail-led health, beauty and wellness offering

Group Strategy & Business Model

Value Creation in 2016

PERFORMANCE AGAINST OBJECTIVES IN 2016 AND PLANS FOR 2017

Clicks

Plans and targets for 2016

Achieved in 2016

Plans and targets for 2017

Developing a competitive and differentiated front shop product offer

Increase front shop private label and exclusive brand sales to 26%

Front shop private label and exclusive sales 27.0% (2015: 25.7%) of total sales

Increase front shop private label and exclusive brand sales to 28.0%

Expand presence of franchise brands in Clicks

Franchise brands in Clicks stores

  • The Body Shop: 88 stores (2015: 86)
  • GNC: 261 stores (2015: 257)
  • Claire's: 123 stores (2015: 1)

Expand presence of franchise brands in Clicks

  • The Body Shop: 103 stores
  • GNC: 300 stores
  • Claire's: 150 stores

Creating a great customer experience in pharmacies

Expand private label scheduled generic medicines range

100 private label medicines (2015: 76)

Expand private label scheduled generic medicines range by 32 products

Grow repeat prescription service to 40% of repeat scripts

41.2% of scripts now on repeat prescription service

Grow repeat prescription service to 50% of repeat scripts

Expand clinic services and open 23 new clinics

Net 38 clinics opened 195 clinics at year-end

Expand clinic services and open 10 new clinics

Growing the retail footprint

Open 20 to 25 new Clicks stores

Net 25 stores opened (2015: 22)

Open 20 to 25 new Clicks stores

50 stores to be expanded/refurbished

511 stores at year-end (2015: 486)
45 stores expanded/refurbished (2015: 38)

60 stores to be expanded/refurbished

Open 25 to 35 new pharmacies

Net 39 pharmacies opened (2015: 22)
400 pharmacies at year-end (2015: 361)

Open 30 to 35 new pharmacies

Driving customer loyalty through ClubCard

Increase membership to 5.5 million

6.2 million members (2015: 5.0 million)

Increase membership to 6.5 million

Grow Baby Club to 250 000 members

311 000 Baby Club members

Grow Baby Club to 400 000 members

Grow Seniors Club to 650 000 members

752 000 Seniors Club members

Grow Baby Club to 400 000 members

Maintaining a motivated and skilled work force

200 pharmacy assistants to be enrolled

283 pharmacy assistants enrolled

300 pharmacy assistants to be enrolled

100 pharmacy bursary students

106 pharmacy bursary students

100 pharmacy bursary students

50 internships

83 pharmacy internships

90 internships

UPD

Plans and targets for 2016

Achieved in 2016

Plans and targets for 2017

Growing private wholesale pharmaceutical market share to 30%

Increase market share to 26%

Market share 24.1%

Increase market share to 24.5%

Maintain volume of business with private hospital groups

Sales to hospital groups increased 4.2% with volumes growing at 2.2%

Maintain volume of business with private hospital groups

Increase Clicks' buying levels from UPD to 98%

Clicks' buying levels from UPD at 98.3%

Increase Clicks' buying levels from UPD to 98.5%

Growing pharmaceutical distribution market share to 30%

Tender for additional agency distribution contracts

No new major agency distribution contracts secured

Tender for new agency distribution contracts

Ensuring effective pharmaceutical quality management

Maintain licences

Licences maintained

Maintain licences

Continuous improvement in quality standards and implement electronic quality management system

Electronic quality management system implemented

Extend cold chain capabilities

Driving operational excellence and cost reduction

Maintain on-time deliveries of 98%

98.5% on-time deliveries

Target 98.5% on-time deliveries

Reduce labour and transport costs

Labour and transport costs below inflation at 3.1% and 5.0% growth respectively

Reduce labour and transport costs

Maintaining a motivated and skilled work force

Maintain employee turnover at 14%

Employee turnover 13.2% (2015: 14%)

Target employee turnover of 14%

Compliance training for all employees

Trained 1 600 employees, including casual labour

Compliance training for all employees, including administrative staff

Improve quality of talent and succession process

Recruited eight middle managers for executive learnership programme

Implement pharmacy assistants learnerships

 

 

Recruit graduates for operations and supply chain management

Medium-term targets

2016 – 2018
targets

Performance
in 2016

2017 – 2019
targets

Return on equity (%)

50 – 60

49.2

50 – 60

Return on assets (%)

14 – 18

13.8

14 – 18

Inventory days

55 – 60

66

60 – 65

Operating margin (%)

 

 

 

  • Group

6.0 ‐ 7.0

6.5

6.0 ‐ 7.0

  • Retail

7.0 ‐ 8.0

7.8

7.5 ‐ 8.5

  • Distribution

2.0 ‐ 2.5

2.5

2.0 ‐ 2.5