Clicks is pushing ahead with the major expansion of its footprint, including its first 24-hour clinic in Gauteng and possible new stores in East Africa.
The pharmaceutical retailer is also expanding its services, with plans to provide more virtual doctor consultations at its clinics.
Clicks will spend R880m in its 2024 financial year ending next August, with half going to new stores as the company targets a total of 1,200.
Early this year, Clicks bought M-Kem, a retail pharmacy in Bellville, Cape Town, that offers a 24-hour dispensary, clinic and beauty therapy services. The pharmacy has an annual turnover of R240m and earnings before interest of between R8m-R10m.
“There are really great learnings coming from M-Kem and currently we are really looking very, very closely at one [a 24-hour pharmacy] in Gauteng. If everything goes well, we should open before the end of the financial year,” said CEO Bertina Engelbrecht. The pharmacy would likely be located close to specialist doctors.
While there were still great opportunities in South Africa there were prospects for further expansion in some parts of Sub-Saharan Africa, with East Africa on the radar, she said.
“There is one of the countries that we are looking at and we are getting incredible support from the government. They really want people to come into the country. So that's very positive.”
Clicks has operations in Namibia, Botswana, Lesotho and Eswatini.
Clicks will have to continue working hard as Dis-Chem is a worthy competitor
— Muneer Ahmed, equity analyst at Denker Capital
During the year to August, Clicks opened 45 new stores, ending the year with 885 in total. Another 38 pharmacies were opened, extending the national pharmacy presence to 711.
About 50% of the country’s population live within 5.1km of a Clicks pharmacy, “highlighting the convenience of the pharmacy chain”, said Engelbrecht.
Clicks plans to open 40-50 new stores and pharmacies in the 2024 financial year.
In the same period, it will add more services and products, including increasing the number of doctors for virtual consultations with patients at some of its 203 clinics.
The company was working to ensure that “we have a network of doctors across the country, and there are more doctors that have availed themselves to delivering such service,” Engelbrecht said. “So we have concluded on this and now it's just about how to ensure that you've got the space and facilities available in stores.”
Clicks' competitor Dis-Chem is integrating its health-care products and services to provide a one-stop shop for people who cannot afford medical aid, including doctors at its stores.
Both companies have medical aid insurance products that give customers access to private health care, excluding hospitalisation.
Clicks partnered with Discovery Health and Auto & General Insurance to provide private day-to-day health-care cover called Flexicare.
Engelbrecht said take up had been slow in the current economic environment. “I am confident that with the phenomenal marketing capability Discovery has, that will grow in the future.”
In the year to August, Clicks grew market share in all core product categories in an environment of growing pressure on consumer disposable income, said Engelbrecht. Clicks increased its share of the retail pharmacy market from 23.6% to 24%, with the front-shop health market share increasing from 32.3% to 32.8%.
Private label sales grew by 15.4%, with one in every four products sold now being a Clicks-branded product.
“The private label and exclusive brands not only increase options available to customers, they enable us to respond to a changing economic environment that may compel customers to trade up or down.”
Sales from private labels and exclusive brands contributed 25.2% to total sales.
Clicks said previously that it aims to grow sales of its branded products in its front shop — all products exclusive of pharmaceuticals — to 35% in the coming years.
The number of Sorbet franchise outlets.
— IN NUMBERS: 194
Clicks’s baby range recorded strong growth across categories including food and nappies. One in every three nappies sold is a Clicks nappy, said Engelbrecht. Clicks will add four more stand-alone baby stores, taking the total to nine. It will also have more dedicated sections of baby products in its stores.
More strong growth came from incontinence products, with sales growing 22.8%.
“We have an ageing population and it's important that in our product range we recognise demographic shifts. We are actively working in supporting destigmatisation of incontinence products.”
Clicks will also increase the number of Sorbet beauty salon outlets, especially Sorbet Man, which is the fastest growing category. Engelbrecht said there was also interest in Sorbet outside South Africa. Sorbet has 194 franchise outlets.
Muneer Ahmed, equity analyst at Denker Capital, said Clicks had “consistently been a great business for many years and they again did not disappoint. It is well ahead of competitors on all key financial metrics. What sets them apart is solid stock management and the ability to generate very high returns on capital spent.”
Ahmed said Clicks is in a sector that is fairly defensive “so we expect them to continue to do well. That said, Clicks will have to continue working hard as Dis-Chem is a worthy competitor.”
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