Our opinion on the current state of CLICKS(CLS)Clicks Group describes itself as a retail-led healthcare group, comprising its flagship brand Clicks, as well as GNC and The Body Shop. It operates 782 stores, 585 of which include pharmacies, making it the largest pharmacy chain in Southern Africa. Despite the increasing trend of retail outlets incorporating pharmacies, Clicks' main competitor remains the listed company, Dischem. A previous challenge for the group was its association with the fifty-nine Musica stores, which have now been closed.
On 10th May 2021, Clicks made a significant expansion by acquiring the pharmacy business of Pick n Pay, which included twenty-five pharmacies located within Pick 'n Pay stores. These pharmacies are being rebranded to Clicks, further solidifying its market presence. Historically, Clicks has shown remarkable stability and growth; the share price has surged by more than 2500% since its listing, significantly outperforming the JSE's average over the same period. This performance underscores Clicks as one of the top blue-chip shares on the JSE.
The company has demonstrated resilience, proving to be relatively recession-proof and continuing to deliver impressive results. For the six months ending on 29th February 2024, Clicks reported a 9% increase in turnover and a 13% rise in headline earnings per share (HEPS). The company highlighted a 14.1% growth in total income to R6.6 billion, driven by strong sales in higher-margin private label products and the beauty category, along with revenue from Sorbet franchise fees.
Despite its high price-to-earnings (P/E) ratio of 27.37, Clicks is viewed as an excellent medium-term investment, suitable for every private investor's portfolio. The share's consistent upward trajectory over the past 15 years resembles a line moving from the bottom left-hand corner of the screen to the top right-hand corner, illustrating its steady growth. Although the share price has experienced a slight decline since the beginning of 2024, this could present a favorable buying opportunity for investors.
