UPDATE 1-Health and beauty sales lift earnings at S.Africa`s Clicks

Published: 2019-04-17 tag: cyclical consumer goods

(Adds details, shares & CEO quote)

JOHANNESBURG, April 17 (Reuters) - South African pharmacy and healthcare retailer Clicks Group reported a 13.2 percent increase in half-year earnings on Wednesday, driven by strong sales of beauty and health products.

The retailer, which competes with Dis-Chem, said diluted headline earnings per share (HEPS) for the six months ended February rose to 300.1 cents from 265.2 cents in the same period the year before.

The group increased its interim dividend by 15.1 percent to 118 cents per share.

Retail health and beauty sales, which includes Clicks and the franchise brands of The Body Shop, GNC and Claire’s, increased by 8.5 percent, while sales in comparable stores rose by 5.2 percent.

“This growth was mainly due to competitive pricing and appealing promotions in the current constrained consumer environment, with promotional sales increasing by 10.3 percent and accounting for 38 percent of the turnover in Clicks,” group Chief Executive Vikesh Ramsunder said in the statement.

South African shoppers are feeling the impact of low growth in disposable income, little job creation and higher fuel prices, as well as value-added tax.

UPD, the group’s pharmaceutical distributor, increased operating profit by 27.2 percent.

Ramsunder said the group was planning capital investment of 700 million rand ($50.09 million) for the year, split across the store and pharmacy network, and group infrastructure to support the increased scale of the business.

Looking ahead, Ramsunder said macro-economic conditions were unlikely to improve in the short to medium term, and “we are expecting the trading environment to remain challenging in the second half”.

“Clicks and UPD are both well positioned for sustained growth and we are forecasting an increase in diluted HEPS of between 10 percent and 15 percent for the full financial year,” added Ramsunder.

At 0714 GMT, Clicks shares were up 3.95 percent at 184 rand.

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