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Cape Town – The Clicks Group [JSE:CLS] announced on Thursday that it has continued to trade well in what it calls "the depressed consumer environment".
On the outlook for the second half of the financial year, CEO David Kneale said trading conditions are expected to remain unchanged, with consumer disposable income under continued pressure.
Load shedding in the winter months poses a further risk to sales, he said.
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Group turnover increased by 14.1% and diluted headline earnings per share was up by 12.8% to 177.6 cents for the six months to February 2015.
The interim dividend was increased by 22.4% to 65.5c per share as the group reported a return on equity of 53.6%.
Kneale said trading conditions continued to be challenging as consumers remained cash constrained and value conscious.
“In this environment our retail businesses all delivered real volume growth and gained market share. UPD, our pharmaceutical distribution business, also continues to gain market share,” he said.
The Clicks chain increased sales by 10.5%, with growth driven by value-oriented promotions. The Clicks store footprint was expanded to include 346 dispensaries and 150 clinics. Clicks plans to grow the chain to 600 stores in South Africa over the longer term.
The Body Shop and GNC, the group’s health and beauty franchise brands, continue to differentiate the Clicks offer. The Body Shop increased turnover by 12.2% and now has a presence in 92 Clicks stores, with 47 standalone stores. The recently launched GNC brand has four stores and a presence in 250 Clicks outlets.
Musica increased sales by 2.4% and continued to gain market share.
UPD benefited from the growth in its preferred supply chain partner contracts and increased turnover by 20.7%, with volume growth of 24.3%.
The group increased the cash inflow from operations to R795m. A total of R448m was returned to shareholders through dividends and share buy-backs.
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Second half outlook
Despite headwinds like load shedding and consumer disposable income remaining under pressure, the Clicks chain is well positioned for continuing growth, according to Kneale. This is due to support by what he calls its strong value offering, the benefits of the relaunched ClubCard and a sustainable pipeline of new stores and pharmacies.
Kneale said diluted headline earnings per share for the year ending August 2015 are forecast to increase by 10% to 15% over the previous year.
Capital expenditure of R379m will be invested this year. After investing R148m in the first half, R231m has been committed for the second half to be spent mainly on store expansion and refurbishment, as well as IT systems.
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