Clicks shoots the lights out – with big expansion plans

Clicks reported strong results for its 2024 financial year, and now the retailer plans to open up to 50 new stores and 50 new pharmacies in 2025.

Clicks released its results for the year through August 2024 on Thursday, which revealed solid results for the retail giant.

Group turnover increased by 9.2% to R45.4 billion. Retail turnover, which includes Clicks, GNC, The Body Shop and Sorbet corporate stores, increased by 11.7%. 

Comparable store turnover grew by 8.4%, with inflation of 6.3% and volume growth of 2.1%.

The company’s profit for the year grew by 11.8% to R2.84 billion, while headline earnings grew by 11.9% to R2.8 billion. 

Basic earnings per share increased by 14.2% to 1,190.3 cents, and headline earnings per share increased by 14.3% to 1,193.5 cents

Cash generated by operations totalled R6.0 billion. Capital expenditure of R891 million was invested mainly in new stores and pharmacies, store refurbishments, supply chain and information technology, slightly less than in 2023.

At financial year-end, the company held cash resources of R2.7 billion, with the final dividend totalling R1.35 billion.

The Clicks chain recorded market share gains across all core health and beauty product categories, with the Clicks ClubCard loyalty programme growing to 11.8 million active members.

In the 2024 financial year, Clicks increased its store base to 936 with the opening of a net 51 stores and the pharmacy network to 720 following the opening of a net nine new pharmacies. 

The retailer explained that its pharmacy openings were below the targeted range due to the Unicorn licensing matter.

Unicorn Pharmaceuticals is a manufacturing company in which Clicks had a beneficial interest.

In 2016, the Independent Community Pharmacy Association (ICPA) accused Clicks of violating the Pharmacy Act and regulations that prohibit manufacturers from having a direct or indirect beneficial interest in a retail pharmacy.

This is to ensure pharmacists do not have a vested interest in the medicines they dispense or recommend.

These concerns led to investigations by regulatory bodies and increased scrutiny of the licensing agreements between Clicks and the Unicorn suppliers.

Following a Constitutional Court loss against the ICPA this year, Clicks offloaded its entire shareholding in Unicorn Pharmaceuticals.

Therefore, the matter was successfully resolved with the Department of Health late in Clicks’ financial year, and after the year-end, pharmacy licences were issued again, which is positive for Clicks’ expansion programme.

The retailer’s medium-term goal is to have 1,200 stores in South Africa. Therefore, in 2025, Clicks plans to open 40 to 50 new stores and 40 to 50 pharmacies.

Clicks has a planned capital investment of R1.03 for the 2025 financial year. This includes R578 million for new stores and pharmacies and the refurbishment of 70 to 80 stores. 

A further R447 million will be invested in its supply chain, technology and infrastructure. 

Looking forward, Clicks said that while consumer spending is expected to remain constrained in the short term, the medium-term outlook for the consumer environment is increasingly positive.

Lower inflation, interest rate relief and declining fuel costs, together with the stronger rand and the extended suspension of load-shedding, are positive for consumer sentiment and should ultimately support increased spending.

Clicks said its management is confident that the group’s competitive advantage and market-leading positions in the health and beauty sectors should ensure that the group continues to deliver on its medium-term financial targets.

This will be supported by long-term organic growth opportunities in Clicks and the increasing scale of the business, supported by strong cash generation and a robust balance sheet.

Clicks’ board of directors has approved a final gross ordinary dividend for the period ended 31 August 2024 of 566 cents per share, up from 494 cents in 2023.