Clicks says private-label products boosted interim earnings
Group raises dividend 15.1% as turnover increases 6.2% in the six months to February
Clicks Group says it grew headline earnings by 12.9% to R763.3m in the six months to February thanks in part to better sales of its private-label products and higher profits from its distribution business.
“Clicks Group delivered another strong health and beauty sales performance ... in an environment of low inflation, subdued economic growth and constrained consumer spending,” it said.
Retail health and beauty sales grew 8.5%, while UPD, the group’s pharmaceutical distributor, grew operating profit by 27.2% as it gained market share, Clicks said.
“The retail margin expanded owing to more customers switching to Clicks private-label products and the positive mix impact from the stronger growth of front shop relative to pharmacy,” it said.
The group raised its interim dividend 15.1% to 118c a share.
It said group turnover rose 6.2% to R15.3bn as retail sales grew 7.7%, or by 4.5% in comparable stores, with selling price inflation of just 1%. Distribution turnover increased 5.1% with price deflation of 0.2%.
While Eskom’s power cuts were weighing on consumer confidence and trading, Clicks said its brands “are well positioned to increase market share”.
It planned to accelerate its store expansion programme by opening 41 new stores in the financial year to end-August 2019, versus the previous target of 25 to 30 stores.
Meanwhile, the UPD business had won two new bulk distribution contracts which would start late in the second half of the financial year.
Clicks said it planned to invest R437m in the second half to build its store and pharmacy network and its support infrastructure.
The group said diluted headline earnings per share for the full financial year ending August 2019 would probably increase by between 10% and 15% versus the prior year.
The trading environment would remain constrained in the second half, particularly if power cuts continued, while retail selling price inflation was expected to average low single-digit levels for the full year.