Cape Town – Clicks Group delivered another resilient retail trading performance as improving margins and robust cash generation contributed to adjusted headline earnings increasing by 11.1% to R2.5 billion in the year to August 2023.
Retail turnover, excluding Covid-19 vaccinations, increased by 12.2% as group turnover grew by 8.2% to R41.6 billion. Group operating profit, adjusted for the insurance recoveries related to the 2021 civil unrest, increased by 9.0% to R3.6 billion while the group’s adjusted operating margin increased by 30 basis points to 8.7%.
Cash generated by operations increased by 37% to R5.9 billion. Record capital expenditure of R930 million was invested in the expansion of the store network and integrated supply chain as Clicks opened its 850th store and 700th pharmacy during the year.
The group returned R2.3 billion to shareholders in dividend payments and share buybacks and at year end held R2.5 billion cash on the balance sheet.
Chief executive Bertina Engelbrecht said Clicks grew market share in all core product categories in an environment of growing pressure on consumer disposable income. Clicks increased its share of the retail pharmacy market from 23.6% to 24.0% with the front shop health market share increasing from 32.3% to 32.8%.
Private label sales grew by 15.4%, with one in every four products sold now being a Clicks-branded product. The Clicks ClubCard loyalty programme increased its membership by over 700 000 to 10.4 million active members and accounted for 80.2% of sales in Clicks. Cashback of R689 million was paid to ClubCard members during the year.
Clicks expanded its retail footprint to 885 stores with the opening of a net 45 new stores.
A further 38 pharmacies were opened, extending the national pharmacy presence to 711. Currently 50% of the country’s population live within 5.1 kilometres of a Clicks pharmacy, highlighting the convenience of the pharmacy chain.
Clicks plans to open 40 – 50 new stores and pharmacies in the 2024 financial year, with the longer-term target of expanding to 1 200 stores.
Engelbrecht said the group successfully concluded three strategic acquisitions totalling R320 million, further entrenching its leadership in health and beauty retailing. These businesses are the Sorbet beauty salon franchise chain of 194 outlets, M-Kem, a long-established 24-hour pharmacy in the Western Cape, and 180 Degrees, a pharmacy software development company.
UPD’s total managed turnover, combining wholesale and bulk distribution, increased by 4.8% to R32.1 billion.
On the prospects for the new financial year, Engelbrecht said the group expects trading conditions to remain extremely constrained. “Our business model remains resilient and defensive and the group has proven its ability to adapt to changing market dynamics.”
“We are confident that the organic growth opportunities in Clicks, together with the group’s strong cash generation and healthy balance sheet, should ensure that the group continues to deliver on its medium-term financial and operating targets,” she added.
Issued by Tier 1 Investor Relations on behalf of Clicks Group
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