Health and beauty retailer Clicks is fast approaching the R100bn market value mark, with the Public Investment Corporation (PIC) and US banking giant JPMorgan in the pound seats to benefit from the group’s market share gains.
Clicks’ market share surged 34.9% to R89bn in the year ended August, after strong growth and aggressive expansion plans.
CEO Bertina Engelbrecht said the share price growth over the past decade was an indicator that the market was buying into the company’s performance and growth outlook.
“When I joined the company, our share price was just over R9; the share price is now trading at close to R400. We have invested ahead of the curve and are reaping the benefits of that. The R100bn market capitalisation mark is within reach,” she said.
“We are very focused and disciplined in executing our strategy and are not distracted.”
Over the past 10 years the group has delivered a total shareholder return of 20.7% compound annual growth rate.
Engelbrecht joined the group in 2006 as group HR director and was appointed as an executive director in 2008. In December 2020, her portfolio was expanded to include strategic stakeholder engagement. She was appointed CEO in 2022, making her the first and only black female to lead a listed retail group in SA.
The PIC is the company’s largest shareholder with a 17% stake, followed by JPMorgan with 5.4%, Ninety One with 5.1% and the world’s largest asset manager, BlackRock, with 4.8%.
Royal Bank of Canada, the largest bank in Canada by market capitalisation, on Thursday increased its holding in Clicks to 5%.
In the year ended August, Clicks increased its store base to 936 with the opening of a net 51 stores and the pharmacy network to 720 after the opening of a net nine new pharmacies, after the company spent R891m in capital expenditure.
The retail giant reported 15.1% increase in trading profit to R4.2bn, while headline earnings went up 11.9% to R2.8bn.
Group turnover was up 9.2% to R45.4bn, as the company gained market share across the board in the year under review, continuing its winning streak. The pharmacy business increased market share from 23.7% to 24.2%, while the beauty and personal care unit increased its share of the pie from 42.7% to 43.8%.
The group’s private label products grew by 13.5% and now account for 30% of front shop sales in the company.
The group has set a target of having 1,200 Clicks stores in the medium term. The retailer held R2.7bn in cash at the end of the year under review, with shareholders in line to receive a R1.35bn windfall in a form of final dividend, set to be paid out in January.
All in all, the group has returned R2.5bn to shareholders in the period, through dividends and share buybacks.
The company has set aside R1bn for capital expenditure for the 2025 financial year, with the bulk of this meant for new stores and store refurbishments and IT.
Its club card loyalty programme continued to attract customers with membership up by 1.4-million in the period to 11.8-million, contributing 82% of sales in Clicks.
Engelbrecht said the group’s performance over the past year highlighted the resilience of its business model and the defensiveness of its core product offering.
On the prospects for the new financial year, she said the medium-term outlook for the consumer environment was positive, though spending was expected to remain muted in the short term.
“Several factors are supporting improved consumer sentiment, which should ultimately translate into increased spending. These include lower inflation, interest rate relief, declining fuel costs, the strengthening currency and the extended absence of load-shedding,” she said.
“We are confident that our competitive advantage and market-leading positions in the health and beauty sectors, together with the long-term organic growth opportunities in Clicks, should ensure we continue to deliver on our medium-term growth targets.
“Lower inflation, interest rate relief and declining fuel costs, together with the stronger rand and the extended suspension of load-shedding in the country are positive for consumer sentiment and should ultimately support increased spending.”
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