Clicks lifts annual profit, shares up 9 pct

The Clicks Group on Thursday reported a 16.8 percent rise in full-year profit, despite sluggish economic growth in Africa's most advanced economy, sending it shares soaring.

Clicks, which sells cosmetic products, pharmaceuticals and electronics, said headline earnings per share (EPS) rose to 399.2 cents from 341.7 cents for the year through 31 August as it increased its market share in health and beauty products.

Headline EPS is the main profit gauge in South Africa, which strips off certain one-off items.

Clicks has increased sales by more than 15 percent to 23.3 billion rand ($2 billion) even as middle-income consumers tighten their belts due to rising interest rates, higher income taxes and ballooning energy costs.

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"Administered prices have risen faster than salaries," Clicks Chief Executive David Kneale told Reuters, referring to utility costs. "Our customers might delay buying a dress, but would still spend on a new lipstick," he said.

Shares in Clicks were at a record high of 9.04 percent at 104 rand by 1111 GMT, outpacing a 2 percent rise by the Johannesburg Securities Exchange's General Retail index .

And the retailer is expanding, despite economic growth expected to languish around 1.5 percent this year and the next.

Clicks said it plans to spend 432 million rand on capital expansion and open up to 25 new stores and 35 new pharmacies this year, growing its portfolio to more than 800 stores and pharmacies.

Even its CD and DVD chain Musica grew sales 2.3 percent and took market share from rivals, Kneale said, as video-on-demand services shrunk the market.

"There will always be a market for the physical product. Our strategy is to be the last man standing in the entertainment space," said Kneale.

- Reuters