South African drug and cosmetics retailer New Clicks lifted first-half diluted headline earnings per share by 34,1% as it boosted market share and said it expected similar gains in full-year profit.
New Clicks said diluted headline EPS, which strips out non-trading, capital and certain extraordinary items, rose to 53,9 cents in the six months to end February from 40,2 cents in the year-ago period.
This was in line with a trading statement last month, when the firm forecast a jump of 30% to 35%.
Gryphon Asset Management chief investment officer Abri du Plessis said the results looked a bit better than what he expected.
On thin volume, New Clicks shares were trading 0,67% higher at R15 at 8.17am GMT, while the JSE general retailers index was up 0,06%.
New Clicks shares have surged 36% so far this year.
The firm said if trading conditions remained steady, full-year diluted headline EPS should rise 30% to 40%.
Interim turnover rose 12,1% to R5,6-billion, matching its rival Pick ‘n Pay, South Africa’s largest supermarket chain, which last month said annual revenue rose 12,1%.
No buy-out approaches
New Clicks CEO David Kneale told Reuters the retailer had not received or pursued any private equity buy-out proposals.
Boosted by record consumer confidence levels and historically low interest rates, South African retail stocks have received lots of interest from private equity investors, which saw the country’s largest fashion retailer Edcon bought by United States firm Bain Capital LLC last month.
Kneale said the retailer’s units had managed to increase their respective market shares over the period.
New Clicks said turnover in its retail businesses grew 14,2% and by 14,1% on a comparable store basis, against price inflation of 1,2%.
Its wholesale pharmacy business, UPD, boosted turnover by 11,3% with inflation at 0,5%.
Kneale said the firm’s core Clicks brand — which increased turnover by 14,1% — had managed to increase market share in its health and pharmaceutical offerings, along with UPD and music division Musica.
New Clicks said its lower income market offering, Discom, increased turnover by 13,2% and by 12,3% on a like-for-like basis, with inflation at 1%.
The retailer said Discom’s operating margin was impacted by a change in product mix and certain one-off charges, resulting in a 2,5% decline in operating profit to R20-million.
The firm opened 15 stores in the first half, with a further 19 planned for the balance of the financial year. Kneale said the stores would be opened across the firm’s units.
Kneale said he was satisfied with progress with the retailers three-year turnaround programme announced last year and that it was above expectations in some units.
”There was really nothing wrong with the strategy but its been more about execution,” Kneale said. – Reuters