CHRIS GILMOUR: Bellwether Clicks is pricey, but it’s still hugely popular
Investors are willing to pay a premium for a company that has proved its resilience in the face of just about any economic cycle
Clicks remains the most highly rated share in the food and drug retailers category of the JSE, with a PE ratio of just under 30. Only Dis-Chem, another pharmacy-orientated retailer comes close. For many years investors have been prepared to buy Clocks shares and sit on them; they love its resilience in the face of virtually any economic cycle, coupled with it being a fairly easy company understand conceptually. It consists of a retail side and a distribution side and the two complement each other well.
For the year to end-August, group turnover rose 6% and retail turnover 11.7%, while UPD (United Pharmaceutical Distributors), the pharmaceutical distribution side of the business, experienced a 2.6% drop from a high base in 2021. UPD had an especially high base of comparison in 2021 in the hospital business because of a high number of hospital admissions in the wake of Covid-19. While its wholesale market share declined slightly, to 28.8% from 31.1%, the group’s operating margi...
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