Clicks Group, the JSE’s fourth-largest retailer by market capitalisation, is taking advantage of rising vacancies in shopping centres to accelerate its store roll-out.
The beauty and health retailer, which usually opens 25 to 30 stores annually, plans to open 41 outlets during this financial year.
This is in sharp contrast to its peers, which are cutting costs and reviewing expansion strategies as a result of the sluggish economy.
The difficulty in the sector can be seen in the country’s biggest clothing retailer, Edcon, planning to reduce its space by about a third over the next three years.
New Clicks CEO Vikesh Ramsunder said the lethargic economy had led to more attractive retail space coming to market, giving it the opportunity to place stores in locations it had been targeting for a while.
Ramsunder said the group’s long-term goal was to eventually have a national footprint of about 900 stores.
It had opened 17 in 2019, bringing the number of shops it operated to 640.
The increased availability of store space is evident in the retail sector’s vacancy rate of 4.2% for March, which was above its long-term average
of about 3%, according to the SA Property Owners Association.
Ramsunder said the group wanted to have a larger national footprint so it could become the retailer of choice for fast-growing consumer sectors, such as the 60-plus demographic. The group said people in this age group and older tended to go to a pharmacy often, and Clicks could provide this service to them through its own dispensaries.
Gryphon research analyst and portfolio manager Casparus Treurnicht said the accelerated expansion came as a surprise as Clicks, under previous CEO David Kneale, was known for being a conservative operation.
Ramsunder, the former COO, took over from Kneale when he retired at the beginning of 2019.
Treurnicht said that if the group wanted to reach its footprint of 900 stores in five years it would have to roll out 44 outlets a year.
Increase stress
He said this was "very aggressive" and its performance needed to be monitored closely, as this rate of expansion could increase the stress on Clicks’s management team.
Treurnicht was nevertheless impressed by its performance for the half year to end-February. Group turnover was up 6.2% to R15.24bn, operating profit rose 11.3% to R1.04bn and headline earnings increased 12.9% to R763.3m for the period.
"This is a tremendous result."
Treurnicht said its focus on its female customers had paid off. "They continue giving their female shoppers a good one-stop shop for a multitude of items core to their needs."
Clicks closed 4% higher on Wednesday at R184 per share, its biggest rise in a month.
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