Clicks boasts stronger earnings
Johannesburg - Retail group Clicks Group [JSE:CLS] on Thursday
reported a 18.1% rise in diluted headline earnings per share (Heps) to 249.7
cents for the year ended August 2011. Diluted earnings per share were up 19.4%
A final distribution of 88.0c per share was declared,
resulting in a total distribution of 125.0c for the year - an increase of 17.7%
over the previous year.
The I-Net Bridge consensus forecast was for diluted Heps of
250.7c and a total dividend of 126.0c per share.
The group's retail turnover increased by 10.9% to R10.8bn,
while its oprating margin improved by 40 basis points to 6.6%, resulting in a
13.9% increase in operating profit for the period.
"Trading conditions became increasingly challenging
during the year. We also encountered the high base set in 2010 which included
the Fifa World Cup. Selling price inflation averaged only 1.6% for the year,
compared to 5.4% in the previous year, which reduced turnover growth by almost
four percentage points," chief executive, David Kneale, said.
Headline earnings increased by 13.9% to R655m. Cash inflow
from operations increased by R244m over 2010 to R677m, with R226m used for
capital expenditure and R848m returned to shareholders through share buy-backs
Inventory days in stock moved from 55 to 60 days and
inventory levels were 14.7% higher at year-end, mainly as a result of stock levels
in the group's pharmaceutical wholesaler UPD returning to normalised levels.
UPD increased turnover by 4.2% as price inflation in the
wholesale business declined to 3.3%.
"The performance of UPD was negatively impacted by the
absence of an increase in the single exit price (SEP) of medicines by the
Department of Health for 2011," Clicks said.
The Clicks chain posted real sales growth of 12.0% and
continued to grow its share of the increasingly competitive healthcare market.
Clicks opened its 400th store in August 2011 as 31 new
outlets were added during the period, the highest number in a single year.
The national pharmacy footprint was extended to 283 with the
opening of a further 32 dispensaries. The Clicks operating margin improved from
6.9% to 7.7%, and operating profit increased by 25.8%.
The group's Musica division saw performance slow in the
second half and turnover for the year was 5.9% lower as the decline in the CD
and DVD markets accelerated.
The Body Shop's operating profit increased by 3.5% despite
the brand experiencing price deflation of 6.6%.
Return on shareholders' equity (ROE) increased from 50.8% to
62.2% for the year, boosted by share buy-backs of approximately R300m in the
last six weeks of the financial year.
Looking ahead, the group said consumer spending was expected
to remain muted in the current uncertain economic climate.
"The group will face increasing cost pressures in
employment, property, transport and utilities. The focus for the year ahead
will therefore be on driving volume and containing costs," it said.
Capital expenditure of R257m has been committed for 2012 and
trading space is planned to increase by 4% to 5%.