Clicks Shares Advance to Record on Gains in Market Share

  • Pharmacy chain shares rise 10%, most in almost seven years
  • Capex spend to focus on South Africa store revamps and growth

Clicks Group Ltd. shares rose to a record after the South African beauty and pharmaceutical retailer reported market share gains that offset weaker consumer spending in its home market.

The stock rose as much as 11 percent, the most since 2008, to an all-time high of 105.70 rand in Johannesburg, giving the company a market value of 25.9 billion rand ($1.9 billion). The shares have climbed 30 percent this year, compared with an 5.3 percent gain in the FTSE/JSE Africa Food & Drug Retailers Index.

“Clicks is taking share across categories and from all our competitors,” Chief Executive Officer David Kneale said in a phone interview on Thursday. That was driven by frequent discount offers, lower prices and the company’s loyalty program, he said. “Clicks has always been a value retailer -- it’s core to what we are doing.”

South African retailers are battling with muted consumer confidence as shoppers hold back on spending even as fuel prices have fallen. Unemployment of 25 percent and almost daily power cuts earlier this year also weighed on households.

Store Revamps

Clicks, which owns 361 medicine dispensaries, the local Body Shop franchise and music retailer Musica, plans capital expenditure of 432 million rand this year, up 17 percent from a year earlier. About 227 million rand of this year’s spend will be on store refurbishments and expansion and about 167 million rand on IT systems and infrastructure, Kneale said.

“The Clicks story is essentially and organic growth story,” he said. “We haven’t reached maturity yet in South Africa and it’s always a lot easier to grow at home.” The company plans to have 600 stores in South Africa in the medium term, up from 460 stores, he said.

Earnings excluding one-time items rose 14 percent to 383.9 cents per share, the Cape Town-based company said in a statement. That compares with a 384.6 cents a share estimate of 10 analysts surveyed by Bloomberg. Sales advanced 15 percent to 22.1 billion rand, while the dividend was raised 24 percent.

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