All change at Clicks

Johannesburg - JSE-listed New Clicks Holdings changed both its name and sector on Monday - the latter to Clicks Group Limited, and the former from general retailer to food and drug retailer.

This followed shareholders approval of the changes at the group's annual general meeting on May 29.

Imara SP Reid analyst Warwick Lucas said the move made sense as the group is a drug retailer. "It highlights the inherent defensiveness of the Clicks portfolio," he said. "The market has taken cognisance of that."

Clicks spokesperson Graeme Lillie said healthcare, including pharmacy and front shop health products, accounts for 37% of the group's turnover. Clicks has a 13% share of the retail pharmacy market and hopes to grow this to 30%.

"The reclassification of the listing reflects the increase in contribution of healthcare in Clicks and UPD [the group's pharmaceutical and wholesale distributor] to the group's earnings," said Lillie. "The new sector more accurately reflects the nature of the group."

Nedcor Securities analysts Syd Vianello said the food and drug sector usually has a slightly better rating than general retailing, and this could benefit the company.

"The sector change has no implications for the value of the Clicks share, but the food and drug retailers should offer a better benchmark for valuation and earnings performance," said analyst at Coronation Fund Managers Sarah-Jane Alexander.

CEO David Kneale said the group has entrenched its leadership in healthcare through the growth of pharmacies in Clicks and the acquisition of a 60% stake in the courier pharmacy business Direct Medicines.

Clicks has 180 in-store pharmacies, with another 20 to open before the end of the financial year in August.

Clicks shares were down 5c at 1 775c per share in Monday early afternoon trade.

- Fin24.com