Africa

S.African drugstore chain Clicks expects up to 13% profit jump

3 minute read

A man walks past a closed branch of South African drug retailer Clicks in Cape Town, South Africa, September 9, 2020. REUTERS/Sumaya Hisham

Register now for FREE unlimited access to reuters.com
  • H1 Diluted HEPS up 9.5%
  • Revenue supported by retail health sales
  • Beauty sales under pressure as people work from home
  • Sees full-year profit rising 8% to 13%

JOHANNESBURG, April 22 (Reuters) - South African pharmacy chain Clicks Group (CLSJ.J)said on Thursday it expects its full-year earnings to be up 8% to 13% after reporting a 9.5% rise in half-year earnings, boosted by consumer demand for preventative medicine and new private hospital business.

The forecast for diluted headline earnings per share (HEPS) for the year ending Aug. 31 does not take into account any trading restrictions which may be imposed in response to a possible third wave of COVID-19 infections in the months ahead, Clicks said.

It also does not consider any potential impact from the group's retail and distribution businesses' participation in the national COVID-19 vaccination programme.

Register now for FREE unlimited access to reuters.com

"This forecast assumes that the current constrained trading environment will be sustained into the second half of the 2021 financial year and continue to be impacted by COVID-19," the company said.

In the six months to Feb. 28, diluted HEPS rose to 371 cents. Further gains were hampered by the impact of the closure of its Musica entertainment business.

HEPS is a measure of profit used for companies in South Africa.

Group turnover increased by 7.6% to 18.1 billion rand ($1.27 billion) as retail health and beauty sales grew by 7.2%, supported by strong front shop health sales growth of 24.7% as customers focused on wellness and immune boosting vitamins and supplements.

Customers working from home and wearing masks has meant lower demand for beauty products like makeup and fragrances and accessories, but skin care performed well, chief executive Vikesh Ramsunder said, as the constant wearing of masks introduced acne for some people.

Turnover was also boosted by its healthcare wholesaler and distributor, United Pharmaceutical Distributors (UPD), which grew turnover by 9% and continued to gain market share, driven by the robust growth in the hospital channel during the pandemic and by attracting new wholesale business.

UPD has bid for a tender to distribute and store COVID-19 vaccines under the country's second phase of the rollout, which is expected to start on May 17. Successful bidders are yet to be announced.

($1 = 14.2516 rand)

Register now for FREE unlimited access to reuters.com
Reporting by Nqobile Dludla; Editing by Emma Rumney

Our Standards: The Thomson Reuters Trust Principles.

More from Reuters