Clicks has passed R50 billion in annual turnover for the first time, at R50.4 billion for the year to August, and it got there while shoppers were spending carefully and rivals were discounting hard. Profit grew too, though more slowly than sales, and the reason sits mostly in a part of the business shoppers never see.
Some of the growth came the old-fashioned way, by opening more shops. Clicks added a net 41 stores and 60 pharmacies over the year and nudged its share of the country's retail pharmacy market up to close to a quarter. Its ClubCard loyalty scheme now has 13.1 million active members, and they account for more than four in every five rand Clicks takes.
The shops made more than they sold
Sales inside the shops grew slowly. Retail turnover rose 4.2%, and in stores open in both years the increase was 1.8%, with prices on the shelves up just 1.5% on average. Clicks puts that down to low price inflation, more promotions and a new warehouse system at its Cape Town distribution centre that went in late in the first half.
Profit is where the shops did better. Retail trading profit, what the stores make before interest and tax, grew 9.9%, more than twice as fast as retail sales, because other income grew strongly and costs were kept tight. The shops now keep 11 cents of every rand they take as trading profit, up from a normalised 10.8 cents a year ago.
UPD, the part that went backwards
UPD is Clicks' distribution business, and its growth this year came mainly from bulk distribution contracts. Its turnover grew 9.2%, yet its trading profit fell 10.4%, for two reasons: two bulk contracts were not renewed, and a smaller adjustment to the single exit price, the regulated price of medicines, earned it less than the year before.
That pulled the whole group back towards the slow lane. Group trading profit grew 4.7%, and headline earnings, the cleaned-up profit figure JSE companies report, rose 2.7% to R3.3 billion.
Clicks does not expect the discounting to ease, with higher fuel prices and interest rates squeezing household budgets. It plans to open 40 to 50 new stores this financial year anyway, on the way to a target of 1,200.
