Clicks CEO David Kneale. Picture: FINANCIAL MAIL
Clicks CEO David Kneale. Picture: FINANCIAL MAIL

CLICKS Group increased sales by 11.7% to R5.97bn in the 18 weeks to December 30 2012, a figure analysts called ‘reasonable’ given the muted consumer spending environment.

The company’s CE David Kneale said on Wednesday: "The trend of consumers delaying their purchases until closer to Christmas continued while consumers were increasingly value conscious this festive season."

The Clicks chain grew turnover by 8%, with dispensary sales growing by 9% and front shop sales by 7.6%. Comparable sales grew by 5.3% with selling price inflation of 2.6%, the company said.

Avior Research analyst Michael McLeod said: "11.7% is reasonable, but the Clicks retail chain coming out with just 8% is a bit slower. The turnover number is being pushed up by UPD (the group’s pharmaceutical wholesaler) with 20.3%, but again UPD carries much lower margins than the Clicks retail chain, so that obviously makes a difference."

Absa Investments analyst Chris Gilmour said that while the results "were not anything to get too excited about, they were not bad".

"The fact that you’ve got selling price inflation of 2.6% and comparable sales growth of 5.3% means you have 2.7% real, organic growth and that’s the figure one has to concentrate on — which, in this kind of tight market is not bad, it’s reasonable," Mr Gilmour said.

The group’s Musica division increased same stores sales by 8.2%, in a declining CD and DVD market, where consumers are shifting their spending from physical to digital formats.

Turnover was affected by the closure of a further seven stores during the period and total sales increased by 1.0%.

According to PricewaterhouseCoopers (PwC), spending on physical music formats is expected to decline at a 10.0% compound annual rate to R746m in 2016 from R1.3bn in 2011.

"I maintain that Musica is a dinosaur company. I just see Musica as being a long-term problem for them and I think they have to do something about it at some point in time," Mr Gilmour said.

The Body Shop, which Clicks manages under a franchise arrangement through standalone stores and capsule ranges within Clicks stores, surprised with solid sales growth of 10.2% and in comparable stores by 6.8%.

"They are progressively putting more and more Body Shop customers into Clicks stores ... this figure could also be the Lipstick Index effect," Mr Gilmour said.

Used to describe increased sales of cosmetics during the recession, the Lipstick Index is a term coined by Leonard Lauder, chairman of the board of Estee Lauder. Speculation around the fashionable financial barometer is that women substitute beauty products such as lipstick for more expensive purchases such as dresses and shoes in times of economic distress. Clicks Group’s UPD wholesale pharmacy business increased turnover by 20.3%.

"UPD has always been a great operation, its the great unsung hero within Clicks. It keeps on producing the goods every year," Mr Gilmour said.