26 April 2012

Release Date: 2012/04/26

Cape Town – Clicks Group today reported a 7.6% increase in diluted headline earnings per share to 131.5 cents for the six months to February 2012 and increased its share of the total health and beauty market.

The interim dividend was increased by 19.2% to 44.1 cents per share.

Return on shareholders’ equity (ROE) increased to 60.7% from 55.8% in 2011.

Chief executive, David Kneale, said the retail trading environment has been highly competitive, with increased promotional offers necessary to attract value conscious consumers.

“Low or negative selling price inflation has led to a slowdown in the growth of the health and beauty market. In this low inflationary environment all our businesses showed real growth in sales.”

He said the group has maintained its competitive advantage by increasing volumes and growing its share of the health and beauty market. Clicks increased retail pharmacy market share to 16.1% from 14.5% in 2011 while UPD grew its share of the private pharmaceutical market to 23.2% from 22.9% last year.

Group turnover increased by 6.8% to R7.7 billion, with selling price deflation of 0.2% for the period. Retail turnover grew by 8.3% with price inflation of 0.1%, while UPD increased turnover by 5.0% as price deflation averaged 0.5%.

Expense growth was well contained at 7.3% despite the opening of 30 new Clicks stores, 29 dispensaries and further investment in UPD’s distribution capacity.

Operating profit increased by 5.8% for the period.

The group remains strongly cash generative, with cash inflow from operations totalling R214 million.

The Clicks chain grew turnover by 9.6% and benefited from new store openings during the period. Clicks increased its store base to 412 while the pharmacy footprint was expanded to 295.

Musica grew operating profit by 11.7% and performed well in a declining market. The brand increased market share in CDs, DVDs and gaming.

The Body Shop posted a strong performance for the first half, with turnover increasing by 14.5%.

UPD grew wholesale turnover by 5.0%. Four new distribution agency contracts were taken on during the period, “evidence of increasing supplier confidence in our ability to provide a full distribution and wholesale service,” he said.

Discussing the outlook for the remainder of the financial year, Kneale said the health and beauty markets are expected to remain highly competitive. Selling price inflation is anticipated to be less than 2% for the full year.

“In these market conditions, the group’s focus will be on driving volume growth and containing costs,” he said. “We are committed to maintaining investment for the longer term growth of the business, with capital expenditure of R183 million committed for the second half.”

Diluted headline earnings per share for the year to 31 August 2012 are anticipated to increase by between 6% and 11% over the previous year.

Kneale said the group remains well positioned for the medium-term through the market leadership and growth potential of both Clicks and UPD.

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

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