Oct. 18 (Bloomberg) -- Clicks Group Ltd.’s full-year earnings rose 9.6 percent as the South African cosmetics and music retailer used price promotions to win customers unwilling to spend money amid doubts about job security.
Earnings per share in the year through Aug. 31 increased to 2.72 rand from 2.48 rand a year earlier, in line with the average estimate of analysts surveyed by Bloomberg. Sales jumped 9.5 percent to 16.2 billion rand ($1.88 billion) with middle-income consumers remaining under financial pressure, the Cape Town-based company said today in a statement.
“People are concerned about job security and they are facing higher daily costs such as electricity prices,” Chief Executive Officer David Kneale by phone from Cape Town today. “We expect consumer spending growth to be muted over the next 12 months.”
Consumer confidence in South Africa was near a four-year low in the quarter and the unemployment rate, at just under 25 percent, is the highest among the more than 60 nations tracked by Bloomberg. The country’s central bank cut interest rates by 0.5 percentage point to 5 percent on July 19 to stimulate the economy as the debt crisis in Europe damped exports.
Retail sales in August increased 6.4 percent on a yearly basis, Pretoria-based Statistics South Africa said yesterday, accelerating from 2.9 percent growth in July.
Clicks rose as much as 1.7 percent to 59 rand and was trading up 0.8 percent at 11:25 a.m. in Johannesburg. The stock has increased 30 percent this year.
The company expects to increase market share in South Africa through new products, cutting costs and investing in additional outlets, Kneale said. Clicks, which opened a net 20 new stores to bring the total to 420 at the end of the fiscal year, still see scope for growth in South Africa and is halfway to its target market share, the CEO said, declining to specify the goal.
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