Clicks Group has continued to trade well in the depressed consumer environment, increasing group turnover by 14.1% and growing diluted headline earnings per share by 12.8% to 177.6 cents for the six months to February 2015.
The interim dividend was increased by 22.4% to 65.5 cents per share as the group reported a sector-leading return on equity of 53.6%.
Chief executive, David Kneale, said trading conditions continued to be challenging as consumers remained cash constrained and value conscious. “In this environment our retail businesses all delivered real volume growth and gained market share. UPD, our pharmaceutical distribution business, also continues to gain market share,” he said.
The Clicks chain increased sales by 10.5%, with growth driven by innovative value-oriented promotions. The Clicks store footprint was expanded to 473, with 346 dispensaries and 150 clinics. Clicks plans to grow the chain to 600 stores in South Africa in the longer term.
The Body Shop and GNC, the group’s health and beauty franchise brands, continue to differentiate the Clicks offer. The Body Shop increased turnover by 12.2% and now has a presence in 92 Clicks stores, with 47 standalone stores. The recently launched GNC brand has four stores and a presence in 250 Clicks outlets.
Musica increased sales by 2.4% and continued to gain market share.
UPD benefited from the growth in its preferred supply chain partner contracts and increased turnover by 20.7%, with volume growth of 24.3%.
The group remains strongly cash generative and increased the cash inflow from operations to R795 million. A total of R448 million was returned to shareholders through dividends and share buy-backs.
On the outlook for the second half of the financial year, Kneale said trading conditions are expected to remain unchanged, with consumer disposable income under continued pressure. Loadshedding in the winter months poses a further risk to sales, he said.
“Despite these headwinds the Clicks chain is well positioned for continuing growth, supported by its strong value offering, the benefits of the relaunched ClubCard and a sustainable pipeline of new stores and pharmacies. UPD will continue to entrench its leadership position in the pharmaceutical distribution market by growing scale and extracting efficiencies.”
Kneale said diluted headline earnings per share for the year ending August 2015 are forecast to increase by 10% to 15% over the previous year.
Record levels of capital expenditure of R379 million will be invested this year. After investing R148 million in the first half, R231 million has been committed for the second half to be spent mainly on store expansion and refurbishment, as well as IT systems.