Clicks Group increased retail sales 11.7% in the year to August 2022 after it lifted margins, tightly controlled costs, generated strong cash flows and provided better returns to shareholders.
Group turnover increased 6% to R39.6 billion. Headline earnings per share increased by 33.5%. The dividend for the year under review increased 30% to 637 cents per share.
CEO Bertina Engelbrecht said in a telephone interview that while the 6% might be slightly below what had initially been targeted for the full year, the group posted excellent results considering the headwinds that were overcome.
Cash inflows came to R4.3bn and the return on equity increased to 48% from 38.2%. During the year R1.7bn was returned to shareholders in dividend payments and share buy-backs.
Engelbrecht said the majority of their shareholders were long-term shareholders who invested on behalf of savers and pensioners, so the aim of management was not only to focus on top-line growth, “but we take our shareholder returns seriously”.
Adjusting for the impact of the KwaZulu-Natal civil unrest and related insurance payments received, headline earnings grew 11.9%. Engelbrecht said 53 stores were impacted by the unrest, four remain closed, and the extent of the looting had an impact on the market afterwards in the province.
Engelbrecht said retail trading was also hampered by significantly higher load shedding disruption in the second half and depressed consumer spending and confidence. Load shedding had the psychological effect of making people less willing to go shopping, she said.
She said sales had been through the second half and this momentum had continued into the new financial year.
Engelbrecht said while the trading environment outlook looked “constrained” there were factors that made the group resilient. IT was price-competitive against major competitors, it had a loyal and growing Clicks ClubCard base, it had private label goods for customers wishing to trade down, while the accessibility of its store locations “should never be under-estimated”.
She said the past year’s results highlighted the defensiveness of their retail categories and the resilience of the business model.
Clicks opened 58 new stores and expanded its retail footprint to 840 stores. The long-term target of stores to be opened was expanded from 900 to 1 200 stores, with 40 to 50 new stores and 40 to 50 pharmacies planned to open each year.
The pharmacy presence was extended to 673 after the opening of 52 pharmacies.
Clicks was the largest vaccination provider during the Covid-19 vaccination programme, administering 2.9 million vaccinations. These vaccinations generated turnover of R1.1bn, resulting in a 5.3% uplift in retail sales.
The Clicks ClubCard active membership increased by over 500 000 to 9.7 million members, and accounted for 80.2% of sales in the year, while the Clicks mobile app had been downloaded by 3 million customers.
UPD’s total managed turnover, combining wholesale and bulk distribution, increased 7.6% to R30.6bn. Three new bulk distribution contracts were secured. Wholesale turnover fell 5.2% owing mainly to lower sales to private hospitals post-pandemic.
The group is investing in renewable energy solutions, and solar panels were installed on the eight Clicks and UPD distribution centres around the country.
“Consumer disposable income is under increasing pressure in the low growth, high inflationary environment, and this will be compounded by the trading disruption from electricity load shedding,” Engelbrecht said.
The group is planning record capital investment of R936m compared with just under R700m last year. The new spend includes R477m for stores and pharmacies and R459m for supply chain, technology and infrastructure.
BUSINESS REPORT