Clicks Looks to Festive Season as Consumer Spending Remains Weak

Clicks Group Ltd. (CLS), a South African beauty and pharmaceutical retailer, said trading over the Christmas holiday season is critical to its fiscal 2014 performance as consumer spending remains weak.

South African consumer confidence reached a 10-year low in the third quarter, according to an index compiled by Johannesburg-based First National Bank and the Bureau for Economic Research. Labor strikes have hit the manufacturing and mining industries while gasoline costs have soared.

“Consumers in the middle-income market, which represent the core customer in Clicks, have remained under pressure over the past year,” the company said in a statement today. Selling price inflation has remained constrained and the company relied on promotional activity to drive sales in fiscal 2013, it said.

Net income in the year through August rose 9 percent to 751.2 million rand ($77 million), the Cape Town-based company said. Sales advanced 14 percent to 17.5 billion rand. The dividend was raised by 11 percent to 1.68 rand per share.

Clicks shares rose 3.9 percent to 58.40 rand as of 10:08 a.m. in Johannesburg, the biggest intraday gain in six weeks.

Clicks plans to spend 338 million rand in the current fiscal year as it invests in automated systems and expands its wholesale and distribution unit.

To contact the reporter on this story: Janice Kew in Johannesburg at jkew4@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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