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Clicks continues expansion, plans to open 11 baby ‘showroom’ stores

Part of a bigger rollout of up to 30 new outlets in FY 2022 and target of achieving a retail footprint of 900 stores in the next few years.
The new Clicks Baby store at Mall of Africa in Waterfall City, Gauteng. Image: Suren Naidoo, Moneyweb

South Africa’s biggest healthcare retailer JSE-listed Clicks Group is continuing its expansion drive despite continuing Covid-19 pressure and the impact of the July unrest on its business.

Clicks executives told investors and analysts during its 2021 full-year results webcast on Thursday that the group is committed to its roll-out of new stores and has a target to reach a 900-store footprint within the next few years.

The group’s outgoing CEO Vikesh Ramsunder said Clicks had surpassed the 750-store mark earlier in the financial year and currently has 782 stores (including its recent acquisition of 25 of Pick n Pay’s in-store pharmacies).

Read:
Clicks CEO Vikesh Ramsunder resigns to take up top job in Australia
Clicks to acquire retailer Pick n Pay’s pharmacies
The textbook last hurrah of Musica

He added that despite the Musica chain being a legacy business, it was still sad to see it finally being forced to close during the reporting period. However, later in his results presentation he gave an update on the group’s expansion plans for its main Clicks retail chain, including the opening of 11 Clicks Baby stores.

“We are planning to invest R495 million in our store network, which includes opening between 25 to 30 new Clicks stores [in FY2022]…. We will continue to grow our retail footprint,” Ramsunder said.

The R495 million is part of the group’s broader R846 million capex plans for the new financial year.

He noted that for FY2021 Clicks had spent a capex of around R690 million, with some R306 million being invested in new stores and the refurbishment of some of its existing stores.

Ramsunder pointed out that a portion of capex from the financial year has been moved into FY 2022. He said part of the group’s overall capex for the new financial year will go towards repairing damaged stores affected by the July unrest in KwaZulu-Natal.

Clicks Baby

Regarding the new Clicks Baby store format, he said that the plan was to have around 11 stores over the longer term in major urban malls that would serve as more of a showroom for larger accessories for babies.

“Online [sales] is an important part of our strategy around the launch of Clicks Baby… We believe that the sale of larger baby accessories will move more online going into the future,” Ramsunder explained.

He added that there would not be a major roll-out of Clicks Baby stores and reiterated that the idea is for the stores to serve as showrooms and most sales for this new chain would ultimately be derived online.

“We opened our first Clicks Baby store at Gateway Shopping Centre in KwaZulu-Natal [in May] and just opened our second store at the Mall of Africa in Gauteng,” he said.

The Clicks Baby move comes as the group’s biggest competitor, JSE-listed Dis-Chem, recently finalised the acquisition of the Baby City chain of stores as part of its expansion into baby accessories.

Read: Dis-Chem defers dividend to buy Baby City

There have been reports that Mr Price Group is also looking at expanding into the baby accessories retail sub-sector.

Commenting on the entry into baby accessories and the overall expansion of Clicks, Sasfin Wealth equity analyst Alec Abraham said: “It will be competitive, but many would argue that just like the other retailers that have decided to stay in SA, they must do more to increase their penetration of the domestic consumer market.”

Listen to Clicks CEO Vikesh Ramsunder speak about the group’s latest full-year financial results (or read the transcript):

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By experience I think this is a bad move for Clicks. Ever seen a busy baby shop these days?

even badder news is Vikesh Ramsunder leaving SA!

Clicks probably gained wallet share from consumers that now refuse to support Dischem:
– price gouging during covid.
– pay directors rent for warehouses owned by directors while refusing to pay shop landlords.

End of comments.

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