Clicks eyes new stores as sales keep tills ringing
CLICKS Group is ploughing ahead with plans to open up to 25 new Clicks stores.
This has raised questions from analysts on why Clicks is focusing so intently on South Africa, perhaps at the expense of expanding in Africa.
“Most retailers look overseas when they’ve run out of road at home, and we haven’t,” CEO David Kneale said.
The numbers appear to attest to this. For the year to August, Clicks increased sales by 9.3% — driven mainly by promotions (as much as 27% of Clicks’s sales came from this) and price competitiveness. Pretax profit climbed 15% to R1.2-billion.
Wholesaler and distributor UPD was the strongest performer in the group, with turnover up 11.1%. Importantly, it raised its share of the private pharmaceutical wholesale market from 24.5% to 25.2%.
The Body Shop increased turnover by 8.5%, while Musica, struggling like all music retailers, increased sales 1.4%.
Sticking with Clicks also paid off for investors, who benefited from a 66% gain in the share price over three years — outpacing the more muted 51% rise in the JSE’s All Share index.
Kneale’s claim that Clicks still has “road” in South Africa is underscored by the fact that its retail pharmacy is gaining market share (up 18% from 17.6% last year) and generating lots of cash (operating cash inflow was R1.5-billion, up by R144-million).
The pharmacies are its strategic cornerstone and it now has 464 Clicks stores — including 339 dispensaries and 139 clinics — after opening 22 last year. T he first of its pharmacies opened in 2004, when large corporate-owned pharmacies were finally permitted in South Africa.
Since then, the rise of Clicks and its rival, Dis-Chem, have eaten into the ranks of the independent corner shop pharmacies, which say their business model is “under siege”.
Kneale, however, said pharmacies needed to become more efficient to survive.
But, he said, “we would urge the efforts of the Pharmacy Council to give pharmacies generally a wider role in the primary healthcare space”, such as allowing pharmacists to prescribe more medicines.
Kneale said the biggest challenge remained the skills shortage. “The country has about half the pharmacists it needs.”