Picture: KEARA EDWARDS
Picture: KEARA EDWARDS

Medicine and beauty products retailer Clicks said on Thursday that it will spend R718m on its stores over the next financial year to pursue additional market share.

Retail health and beauty sales rose 10.5% in its year to end-August, the group said, amid market-share growth across all its core product categories.

Clicks, which operates 704 stores and 545 pharmacies, increased its share of the retail pharmacy market one percentage point to 24.9%, saying it is well positioned to extend these gains.

SA retailers have been battered by poor trading conditions, amid rising job losses and weak economic growth, which has made it difficult for companies to pass on costs to their customers.

Headline earnings per share, the widely watched measure of performance, rose 12.2% to 683.9c for the year ended August, thanks in part to its medicine distribution unit, United Pharmaceutical Distributors (UPD), winning new contracts.

UPD’s total managed turnover, which combines wholesale and bulk distribution, rose 17.6% to R21.1bn, with the business gaining four new distribution contracts during the year and growing its market share one percentage point to 27%.

Group operating profit increased 14.2% to R2.3bn, while cash generated by operations rose 19.5% to R2.9bn.

The group upped its total  dividend 17.1% to 445c per share.

Clicks’s share price has outperformed its peers so far in 2019. rising about a quarter, compared to a 3% rise in the JSE’s food and drug retailers index. Analysts, and the company, have cited the defensive nature of health and beauty products, which generally fare well during economic downturns.

gernetzkyk@businesslive.co.za