Clicks (CLS) – Marginal Uplift

We unpack CLS’ retail division’s gross profit margin and total income margin and find that its other income has been growing ahead of gross profit. We assess the key reasons for total income margin expansion over the last ten years and find that in the earlier years it was driven by improving supply chain efficiencies. We estimate how much more margin CLS retail can extract as its private label contribution nears its target and believe that most margin gains have already been achieved.