Clicks loses shine as profit outlook disappoints

You can also listen to this podcast on iono.fm here.

DUDUZILE RAMELA: In its interim financial results for the six months ended the 28th of February 2026, the Clicks Group returned R2.3 billion to shareholders – dividend payments totalling R1.5 billion, and share buybacks of R752 million.

Group turnover increased by 7.4% to R24.9 billion, with retail turnover – which includes Clicks, UniCare, the Body Shop and Sorbet corporate stores – increasing by 5.4%. And in these six months Clicks ClubCard members received R527 million in cashback rewards.

Bertina Engelbrecht is the CEO of Clicks, and she joins us now to weigh in on this. Thank you very much, Ma’am, for your time this evening. How would you characterise the results?

BERTINA ENGELBRECHT: I think the results were muted. We would have to admit that, partly of course I think from intensified competition – a little bit of an own goal in terms of our systems implementation in our warehouse – but overall we have come out of it. We are recovering and I think that’s really positive.

The most positive thing that I take out of it is that we have had really very good market share gains in a core category, which is retail, as well as personal care where we are head-to-head with all national retailers. And then we’ve defended market share really very well in both Baby and Hair Care.

And then the other standout performance was in our legacy category of small household appliances. A 150 basis point market share increase is not to be sneezed at.

Read: Clicks shares slide to 52-week low, despite earnings jump

DUDUZILE RAMELA: Not at all. As you rightfully mentioned, [there were] some headwinds like operational challenges in the Western Cape and a constrained consumer and, in spite of this as you mentioned, expanding that market share. So what do you put this down to?

BERTINA ENGELBRECHT: Well, I really put it down to what I consider to be our most valuable asset, which is ClubCard. In the period we’ve added another 800 000 active ClubCard members. If you look at it, well, they’ve contributed over 83% to our total turnover. What is most pleasing?

It is the most used loyalty card in the mass market as well as among the youth. That augurs very well for the health of the programme going forward, as well for the group.

ADVERTISEMENT

CONTINUE READING BELOW

DUDUZILE RAMELA: Absolutely. Here’s another interesting stat – 53.6% of households are now living within a five kilometre radius of a Clicks Pharmacy. Talk us through the salient features of your expansion strategy and how it has translated in the results.

BERTINA ENGELBRECHT: Okay, a couple of things. First I just want to point out that we’ve got a minority investment in ARC, which is a top-end premium retail brand, really focusing on beauty and fragrance. And then secondly, it’s the work that we’ve done in Sorbet, where we’ve done a 100% acquisition, and there you’ve a whole franchise network.

Now, the interesting thing is that when you look at the ARC customers, over the last 12 months they have spent R331 million in Clicks.

And for every one rand that the ARC customer earned in cash back from their shopping in ARC, they spend the equivalent of R5.72 at Clicks. So I think we’ve really made pretty wise investments.

The second thing is that over the last 6 months, on average, we’ve added three new (ARC) stores to our portfolio. So we are very well on track in terms of getting to our interim target, I call it, of 1 200 stores. And I think there is no reason to believe that we will not be revising that target upwards in the next 18 to 24 months.

Listen/read:
Clicks shares look cheap after selloff
Gloves are off in retail
Clicks looking to cement itself as the ‘leader in beauty’

DUDUZILE RAMELA: I’d like for us to take a look maybe more in terms of the outlook, and maybe speak to UPD [United Pharmaceutical Distributors] as well, because on the distribution side, UPD delivered a 13% increase in turnover – and that’s largely powered by a 31.1% surge in revenue from preferred-supplier bulk contracts.

So that has doubled its electricity delivery-vehicle fleet to 85 – prudent in the face of the current disruption to global energy supplies.

BERTINA ENGELBRECHT: And also very prescient, because what we have done there is, even before we had all of the load shedding we had started work on moving towards renewables, because we committed ourselves as an executive team to a future in which we saw ourselves as stewards for future generations…

So we are very fortunate because we had started the work much earlier than anybody else.

BERTINA ENGELBRECHT: If you look, just over 50% of UPD’s wholesale fleet was already on electric vehicles last year; that already dropped fuel costs as a percentage of total transport costs by 5%. So you can imagine what the increase to 80%, 86% of the fleet will be doing. But the important thing for UPD’s customers is that we will mitigate the cost of a fuel surcharge for them.

That means I think that UPD is probably going to be growing ahead of competitors. We just look at that as a single factor.

But there are other areas. All of our distribution centres are already solar-fitted, and we’ve got battery storage as well here in this building – and in all of our own facilities we’ve done that. So I think when you’re doing what’s good for business, you’re also doing good for society in general.

Read: SA’s solar leak – and how homes and EVs could help fix the grid

DUDUZILE RAMELA: Taking a look at the road ahead, I saw something interesting in the form of concept stores that you are contemplating. What will those look like as you give us an overall view of how the future is looking?

BERTINA ENGELBRECHT: Well, one of the things that we realised is Clicks really – when you’re thinking about how you present yourself – probably needs a minimum of around 400m².

We do have smaller Click stores, but to have the full offer you need a slightly bigger store. That limits just how fast we can expand in certain areas. And so the first is the smaller differentiated concept store will be in densely populated nodes with very good transport hubs, and it will also go into rural areas. It will have a very curated range.

We probably wouldn’t have a pharmacy in such a store. It will not be Clicks-branded, and we are currently just working through the final dynamics.

We’ve been busy with the work for the past eight months, and I think the property teams have now identified where the trial stores are going to be, and we are closing up on that. And then I think Bob’s your uncle – and we are ready to launch the first 10 of those trial stores.

DUDUZILE RAMELA: That’s fascinating – also the element of looking at rural areas. What informed that? What did you pick up that was missing?

BERTINA ENGELBRECHT: Well, one of the things that we do is we do a lot of benchmarking of ourselves – not only locally, but also globally. And in one of the East European countries there was a phenomenal case study of a retailer and the way in which they expanded, because often in rural areas people say, ‘There are too few people’. That’s actually not the reality. There are many people. They may just not be in a formal household. They do earn money, but it may not be money that is earned each month. And so I think it’s understanding those dynamics and understanding the potential that resides there.

Listen/read:
Clicks vs Dis-Chem: Which one for your portfolio?
How Dis-Chem is taking the fight to Clicks

DUDUZILE RAMELA: Fair enough. Just one more thing. I know I said I was going to let you go, but I can’t let you go. Let’s take a look. Included in your outlook you’re going to double down on investment with R1.3 billion capital expenditure planned for this financial year. Are you able to expand on that for us, please?

BERTINA ENGELBRECHT: Yes. The store-opening programme in the first half was not good enough from my perspective, so we’ve set a target of 40 to 50 stores. That’s what I’ve asked the team to deliver for the full year. So 53% of that R1.3 billion for the full year will actually go to new store and new pharmacy openings.

Pharmacies – in the first half we opened 17 new pharmacies. We believe that we will also get to the target of between 40 and 50 stores, because now we’ve actually a number of pharmacy licences in hand, which makes it easier for us to achieve that particular target.

And then of course store refurbishments. One of the things that we are quite precious about is that we always want our stores to look neat and modern, and not to take the customer for granted.

That means that you’ve got to constantly revitalise your store. The interesting thing is that when you do that you see sales uplift in your store. So it’s the right thing to do – not only for the customer, but also for our own bottom line.

DUDUZILE RAMELA: Your message to your team? I was speaking to another company this week, and people look out for such things. It’s how they are treated that ultimately determines whether they’ll come back to this particular product.

But there’s a mall not too far from us, and I’ll tell you, one, it is clean, so I can agree with you on that. But two, the staff – oh, they warm my heart because from the minute you walk in, from the lady at the door to the guys behind the tills, they’ll still even remind you now ‘you can go for it’. But if you want to exercise some discipline, do that too. It’s cool. But they go above and beyond the call of duty to make you feel ‘I can come back here’. So you can speak to the people that work with you.

BERTINA ENGELBRECHT: Always the evening before the results I do a communication to our staff. And what I said to them is that I’m humbled by them. Every single day I look at their commitment and their dedication, and you couldn’t ask for more.

And really, the reason we’ve got the loyal customer card is the members that we have. Thank you so much for the comment that you’ve just made, because sometimes the people who work across an organisation are often overlooked. We look at the people in the head office, and we think that’s actually the heart of the company. The heart of our company is in every store and every pharmacy, and that’s actually where the magic happens. So I’m humbled every single day, and I feel absolutely privileged.

What I said to the team last night is that I am undertaking, together with my executive team, to never let them down, because at the end of June, I’ll have been in this company for 20 years – and our staff have never let me down.

DUDUZILE RAMELA: Congratulations and thank you. Onwards and upwards. Bertina Engelbrecht is the CEO of Clicks Group.