Clicks said on Wednesday that it remained “committed to its medium-term target” of 1 200 new stores after it opened 29 new pharmacies to date in the current financial year.
Image: Simphiwe Mbokazi/Independent Newspapers
The Clicks Group plans to open up to 55 new chain stores and an equal number of pharmacies this year as it continues on an ambitious expansion plan.
This move comes despite facing a challenging economic landscape marked by increased value-added tax (VAT) and ongoing geopolitical uncertainties, particularly related to the country's trade relations with the United States.
Clicks said on Wednesday that it remained “committed to its medium-term target” of 1 200 new stores after it opened 29 new pharmacies to date in the current financial year. The chain opened its 950th store in February and extended its national pharmacy footprint to 740.
The pharmaceuical group's positive outlook is despite the looming geopolitical risks that could affect South Africa’s economic performance weighed down by depressed consumer spending.
“The trading environment will remain constrained in the second half of the 2025 financial year, with consumer spending expected to be impacted by the VAT rate increase effective from 1 May 2025. In addition, ongoing global uncertainty and geopolitical risks could adversely affect the country’s macroeconomic outlook,” said the company.
Nonetheless, Clicks has forecast an increase of between 11% and 16% in its diluted headline earnings per share (HEPS) for the full year to August 2025 compared to the previous year.
This increase in HEPS is against the backdrop of anticipation that the retail environment will remain “constrained in H2 2025” while “the VAT rate increase is expected to impact” consumer spending.
Over the half year period to February 2025, Clicks managed to grow its market share in the core health and beauty categories, with increased contributions from private label products. Strengthening margins and robust cash flows were also recorded for the period.
“Clicks reported strong growth in front shop health and pharmacy, higher sales of private label products and increased promotional sales,” it said.
However, retail costs grew by 8.5% mainly due to a higher wage increase and the resumption of pharmacy openings. Higher electricity, card acquiring and advertising costs also contributed to the surge in retail costs.
Retail turnover, which includes Clicks, The Body Shop, M-Kem and Sorbet corporate stores, increased by 6.4% over the half year.
Distribution costs for the half-year grew by 1.6% as the higher employment costs to maintain service levels during the systems implementation in the previous year were removed.
This meant Clicks’ trading profit for the interim period surged by 12.6% at R2.1 billion while the group’s trading margin increased by 60 basis points to 9.1%.
The company opted to declare an interim gross ordinary dividend of 238 cents per share compared to 210 cents per share in the previous comparative period. It said dividends for the period under reviewed will be paid from distributable reserves.
Group turnover for the period grew 6.2% while diluted headline earnings per share firmed up 13.2%. Inventory levels increased by 5.1% and group inventory days were one day lower at 85 days.
Consequently, the group’s net working capital days increased from 44 to 45 days while cash generated by operations after working capital changes totalled R1.7bn.
A total of R222 million in Capital expenditure was reinvested mainly in new stores and pharmacies, store refurbishments, supply chain and information technology.
The Clicks ClubCard grew its active loyalty membership to 12.1 million after adding up over 1 million new members in the past year.
“ClubCard accounted for 81.6% of sales in Clicks and members were rewarded with R438m in cashback over the six-month period.”
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