Clicks (CLS) – Competing with a listed Dis-Chem

We evaluate the performance of CLS in the context of the recently released pre-listing information of Dis-Chem, and highlight the potential impact of the impending listing of this key competitor. While CLS has done well to maintain its topline growth despite Dis-Chem’s accelerated rollout since 2015, we think GP margins and Other income may come under pressure. We estimate that the rollout of 20 Dis-Chem stores p.a. could generate additional turnover of ZAR1.4bn p.a., and identify the Personal care and Beauty category (which contributes 26.2% for CLS), and Babycare (c6.9% contribution) as most at risk for CLS.