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Clicks shares advance to record

Up 11% to R105.70 in Johannesburg.

Clicks Group shares rose to a record after the South African beauty and pharmaceutical retailer reported market share gains that offset weaker consumer spending in its home market.

The stock rose as much as 11%, the most since 2008, to an all-time high of R105.70 in Johannesburg, giving the company a market value of R25.9 billion ($1.9 billion). The shares have climbed 30% this year, compared with an 5.3% gain in the FTSE/JSE Africa Food & Drug Retailers Index.

“Clicks is taking share across categories and from all our competitors,” chief executive officer David Kneale said in a phone interview on Thursday. That was driven by frequent discount offers, lower prices and the company’s loyalty programme, he said. “Clicks has always been a value retailer – it’s core to what we are doing.”

South African retailers are battling with muted consumer confidence as shoppers hold back on spending even as fuel prices have fallen. Unemployment of 25% and almost daily power cuts earlier this year also weighed on households.

Store Revamps

Clicks, which owns 361 medicine dispensaries, the local Body Shop franchise and music retailer Musica, plans capital expenditure of R432 million this year, up 17% from a year earlier. About R227 million of this year’s spend will be on store refurbishments and expansion and about R167 million on IT systems and infrastructure, Kneale said.

“The Clicks story is essentially and organic growth story,” he said. “We haven’t reached maturity yet in South Africa and it’s always a lot easier to grow at home.” The company plans to have 600 stores in South Africa in the medium term, up from 460 stores, he said.

Earnings excluding one-time items rose 14% to 383.9 cents per share, the Cape Town-based company said in a statement. That compares with a 384.6 cents a share estimate of 10 analysts surveyed by Bloomberg. Sales advanced 15% to R22.1 billion, while the dividend was raised 24%.

©2015 Bloomberg News

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