On a 28.6 p:e, Clicks is by no means trading at a bargain-basement level. But then it hasn’t done so for many years. Supporting the health and beauty retailer’s premium rating is a decade-long record of unfailingly delivering solid earnings and dividend growth, even under the toughest conditions. "David Kneale [CEO since January 2006] has done an unbelievably good job," says Evan Walker of 36One Asset Management. Reflecting this, Clicks’ return on equity during Kneale’s tenure has soared from 14% to 47%. What Kneale has done is to harness the resilient qualities of the drugstore model in which the front store is supported by a back-of-store pharmacy. It is the model used by sector giants such as Walgreens in the US. People clearly place a high priority on their health and feel the same about their appearance. "Beauty products remain an affordable luxury," says Kneale, who has declared himself a believer in the lipstick index. The index was devised by Estée Lauder chairman emeritus L...

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