Clicks Group, the well-known South African health and beauty retailer, has reported its annual results for the year ended August 31, 2023. The company showcased remarkable resilience and continued growth despite challenging market conditions, demonstrating its ability to adapt to changing dynamics.
Here are the key highlights from Clicks Group’s 2023 annual results:
In a year marked by economic uncertainty and evolving consumer preferences, Clicks Group managed to thrive, achieving significant milestones and maintaining robust financial health. The company’s performance was characterized by:
One of the most noteworthy achievements was the successful conclusion of three strategic acquisitions totaling R320 million, which strengthened Clicks Group’s leadership position in the health and beauty retail sector. These acquisitions included:
In its pursuit of long-term growth, Clicks Group allocated a record R930 million for capital expenditure. This investment was primarily directed towards expanding the store network and integrated supply chain. Notably, Clicks opened its 850th store and 700th pharmacy during the year.
The impact of the 2021 KwaZulu-Natal civil unrest was factored into the financial reporting. Adjustments were made for insurance recoveries related to the unrest to present a normalized view of Clicks Group’s underlying operating performance.
Clicks Group’s achievements in 2023 were the result of dedicated efforts, strategic decisions, and the company’s commitment to delivering value to its customers and shareholders. Here’s a closer look at the key factors that contributed to this success:
In an environment characterized by growing pressure on consumer disposable income, Clicks Group managed to deliver stronger second-half turnover growth. The company also recorded market share gains in all core product categories, demonstrating its ability to adapt to evolving market dynamics.
One of the driving forces behind the company’s strong growth in private label sales and the sustained recovery in the beauty category was the Clicks ClubCard loyalty program. With 10.4 million active members, this program played a pivotal role in attracting and retaining customers.
Despite initial challenges, UPD reported improved turnover and profitability in the second half of the year. The business was impacted by the lower increase in the regulated single exit price (SEP) of medicines and operational challenges during the implementation of new systems in three of its distribution centers. However, the operational metrics in the distribution centers have now normalized.
Clicks Group’s financial success was further highlighted by margin expansion. The retail margin grew by 130 basis points, benefiting from strong growth in higher-margin private label products and the recovery in the beauty category. Additionally, the distribution margin expanded by 20 basis points due to improved management of shrinkage and waste in UPD.
Clicks Group’s prudent financial management was evident in the robust cash generation of R5.9 billion. This strong cash position allowed the company to invest in its future growth and provide returns to its shareholders.
The economic outlook remains uncertain, and Clicks Group acknowledges that trading conditions are expected to remain extremely constrained in the new financial year. However, the company’s resilient business model, defensive approach, and proven adaptability to changing market dynamics provide confidence in its ability to weather challenges.
Clicks Group is committed to pursuing organic growth opportunities. In the upcoming financial year, the company plans to open 40 – 50 new stores and 40 – 50 pharmacies, aligning with its longer-term target of 1,200 stores. A capital investment of R880 million is slated for the 2024 financial year, including investments in new stores, pharmacies, refurbishments, supply chain enhancements, and technology infrastructure.
The board of directors of Clicks Group has approved a final gross ordinary dividend of 494.0 cents per share for the period ending on August 31, 2023, compared to 457.0 cents per share in the previous year. Shareholders are reminded that Dividends Tax (DT) of 20% will be withheld in terms of the Income Tax Act, resulting in a net dividend of 395.2 cents for those not exempt from DT.
Shareholders are advised of the following key dates in relation to the final dividend:
During the period from January 24 to January 26, 2024, share certificates may not be dematerialized or re-materialized.
Clicks Group’s 2023 annual results reflect a compelling narrative of resilience, growth, and adaptability. In the face of challenging economic conditions and the impact of civil unrest, the company has not only weathered the storm but has also expanded its market presence and delivered value to shareholders. As the journey continues, Clicks Group remains committed to its long-term growth targets and solidifying its position as a leading health and beauty retailer in South Africa.
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