Release Date: April 16, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Clicks Group Ltd (CLCGY, Financial) reported a 13.2% increase in diluted headline earnings per share, showcasing resilience in a tough trading environment.
- The company opened its 950th Clicks store and 740th pharmacy, expanding its retail footprint significantly.
- The active loyal ClubCard customer membership base grew by 1.1 million, contributing over 81% of retail turnover.
- UPD launched South Africa's first fleet of pharma-compliant electric vehicles, enhancing its sustainability efforts.
- The group achieved a B-BBEE Level 3 rating, reflecting improvements in its transformation agenda.
Negative Points
- Retail costs grew by 8.5%, driven by wage increases and higher electricity costs, impacting overall profitability.
- The general merchandise category underperformed, with only a 4.5% increase, highlighting a need for competitive improvement.
- Market share in small household electrical appliances declined by 70 basis points, indicating challenges in this segment.
- The independent pharmacy market is declining, affecting UPD's market share in this channel.
- The consumer environment is expected to remain constrained due to potential VAT increases and geopolitical risks.
Q & A Highlights
Q: The group plans to open a similar number of stores and pharmacies. How are you finding the process with the Department of Health in securing licenses, particularly in clearing the pharmacy backlog?
A: Bertina Engelbrecht, CEO: We've improved our engagement with the Department of Health and the South African Pharmacy Council. Over the last 1.5 weeks, we've secured 18 additional pharmacy licenses. We are confident we will meet our target of opening 45 to 55 new pharmacies this financial year.
Q: Online sales growth stood out at 23%. Did the shift in strategy drive this? And could we please get your thoughts on future online plans?
A: Gordon Traill, CFO: It's not a shift in strategy but part of ongoing investments. We've opened a dark store in Cape Town and plan to refresh our pharmacy app post the rollout of our pharmacy system. Delivery times have halved in key regions, improving customer service.
Q: The suppliers did not take up the SEP increase to the same extent as in prior years. Could you provide some color on what drove this change?
A: Gordon Traill, CFO: Suppliers sometimes decrease prices to gain market share. It's a decision made by manufacturers, and we don't have control over it.
Q: Given the growing global demand for GLP-1 drugs like Ozempic, do you have any projections on how significant they could become for pharmacy sales going forward?
A: Bertina Engelbrecht, CEO: Diabetes is a significant health issue in South Africa. The launch of Mounjaro, indicated for weight loss, is a game changer. We've seen substantial growth in the diabetic category, and there's potential for further growth as these drugs become more widely used.
Q: Given the strong performance in baby and beauty, are there any plans to enhance or expand these categories, perhaps by introducing new products like Korean skin care?
A: Bertina Engelbrecht, CEO: We are constantly looking for new trends and innovations. Our private label and exclusive products are key drivers in these categories, and we already offer some Korean and Japanese brands.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
