Retailer Clicks Group has grown headline earnings more than 6% at the halfway stage of its financial year, as constrained consumer spending and internal systems pose challenges and as it continues its store expansion strategy.
On Thursday Clicks reported that turnover for the six months ended February was up 7.4% to R24.9bn, while headline earnings increased by 6.4% to R1.5bn. Headline earnings per share rose by 8.1% to 653c, benefiting from share buybacks in the last 18 months.
An interim dividend of 258c per share was declared, up 8.4% year on year.
Group trading profit increased by 7.4% to R2.3bn and the trading margin was maintained at 9.1%. Cash generated by operations was R1.9bn.
Retail turnover, which includes Clicks, UniCare, The Body Shop and Sorbet corporate stores, increased by 5.4%. Turnover in comparable stores was 3.1% higher and selling price inflation averaged 2.3% for the six-month period, Clicks said.
Distribution turnover grew by 13.0%, mainly driven by a 31.1% increase in revenue from preferred supplier bulk contracts.
Pharmacy sales increased by 8.6% and retail pharmacy market share strengthened to 24.9% from 24.2% in the prior period.
Retail turnover was affected by delays in the implementation of the warehouse management system (WMS) at the Clicks distribution centre in Cape Town. This had the effect of reducing product availability in Western Cape and Eastern Cape stores, particularly over the festive season.
Management estimates that the systems delay reduced retail turnover by about R175m, or 0.9% of retail sales. Product availability improved steadily and returned to targeted levels by the end of February, it said.
Retail trading was further impacted by aggressive competitor discounting over the festive season, it added.
Clicks increased its footprint to 1,003 stores while the national pharmacy network was expanded to 795. It plans to open 40-50 new stores and the same number of new pharmacies in the 2026 financial year.
In addition, 10 differentiated concept stores will be piloted in the second half of the year.
Clicks ClubCard grew active membership by 800,000 to 12.9-million, contributing 83.7% of sales in Clicks. Loyalty members received R527m in cashback rewards during the six months.
UPD delivered strong growth in wholesale and preferred supplier bulk distribution turnover. However, UPD remains constrained in the hospital and independent channels, it said.
Capital expenditure of R311m was invested mainly in new stores and pharmacies, store refurbishments, supply chain and information technology.
Capex of R1.3bn is planned for the 2026 financial year, which includes R662m for new stores and pharmacies and the refurbishment of 80-90 stores. A further R594m will be invested in supply chain, IT and infrastructure.
The group says the consumer environment is expected to remain under significant pressure in the second half as rising fuel prices and associated inflationary pressures constrain household spending. UPD recently acquired a medical consumables business and will be launching this offering to customers, it said.
“The group remains committed to achieving its medium-term financial targets as well as its medium-term store target of 1,200,” it said
Clicks is forecasting a 4%-9% increase in full-year diluted HEPS. This is based on the retail environment remaining constrained in the second half and geopolitical conflict adversely affecting South Africa’s macroeconomic outlook and growth prospects.
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