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Clicks on the mend
New Clicks, whose past performance has been spotty, reported a 28% rise in diluted full-year headline earnings. The results were boosted by share buybacks and, more importantly, sales of pharmaceuticals.
Better yet, “real earnings growth” is tentatively predicted next year. For a store that caters to customers fairly high up the spending spectrum, this is pretty good news. It suggests there is life in the old consumer yet. The company, of course, touts its “defensive” qualities.
However, it is more complicated than that. The gains are not so much on account of surprisingly resilient consumer spending, but rather market-share gains. Retail pharmacy market share went up from 9.3% to 10.7% for example. This suggests the mom-and-pop pharmacies are being out-gunned, and are likely to take a further salvo as 40 -50 more Clicks pharmacies are planned.
While this is good news for shareholders, it does not suggest any particular confidence among consumers that can be generalised to the market as a whole.
Source: Business Day
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