Clicks flags rising fuel, security, insurance and electricity costs

Clicks Group on Thursday (28 April), pointed to a ‘resilient’ financial performance for the six months ended February 2022, with group turnover up by 9.0% to R19.6 billion amid the ongoing tough trading environment.

Retail sales grew by 13.6%, with selling price inflation of 3.7%. Distribution turnover increased by 0.6%, with price inflation of 1.9% for the first half, it said.

Adjusted total income grew by 10.6% to R5.3 billion while retail costs were held below turnover growth and increased by 12.2%, with comparable costs contained to a growth of 6.5%. Distribution costs increased by 8.4% owing to the impact of new bulk distribution clients as well as higher fuel, security, insurance and electricity costs.

Adjusted group operating profit increased by 7.5% to R1.5 billion, and headline earnings per share from continuing operations increased by 20.1% to 467 cents.

Adjusting for the impact of the second SASRIA insurance payment, headline earnings from continuing operations grew by 8.6% and diluted HEPS by 10.2%, Clicks said.

Cash generated from operating activities before dividends paid totalled R590 million. Capital expenditure of R352 million (H1 2021: R269 million) was invested mainly in new stores and pharmacies, store refurbishments, supply chain and information technology, it said.

The board approved an interim gross ordinary dividend of 180.0 cents per share (2021: 142.5 cents per share). The source of the dividend will be from distributable reserves and paid in cash.

Clicks said that its total SASRIA settlement for damages from the KZN civil unrest amounted to R710 million (excluding VAT). The first interim payment of R217 million was accounted for in the 2021 financial year. The second interim payment of R217 million has been included in the current reporting period.

The final payment of R276 million, which was received after the end of the current reporting period, will be accounted for in the 2022 full-year results.

Looking ahead, Clicks said its management expects trading conditions to remain constrained in the second half of the year owing to the increasing pressures on consumer disposable income in the current low growth environment. “This will be compounded by the trading disruption from ongoing electricity load shedding.”

Growth in Clicks will be supported by the ongoing Covid-19 vaccination programme and the opening of a further 28 stores for the year, while the first-half recovery in the beauty category is expected to continue.

Capital investment of R876 million is planned for the full financial year, comprising R565 million on stores and R311 million on IT systems and supply chain infrastructure, including solar installations on all Clicks and UPD distribution centres.

The directors forecast that earnings for the financial year ending August 2022 will increase over the 2021 financial year as follows:

Diluted headline earnings per share:

  • Group: Increase of 30% to 35% (FY2021: 773.6 cents)
  • Continuing operations: Increase of 25% to 30% (FY2021: 793.7 cents)

Diluted adjusted headline earnings per share:

  • Group: Increase of 10% to 15% (FY2021: 816.7 cents)
  • Continuing operations: Increase of 8% to 13% (FY2021: 836.8 cents)

This forecast is based on the assumption that the trading environment will remain constrained in the second half of the 2022 financial year, Clicks said.

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