Clicks Group (CLS) – Positive Side Effects

Clicks has long targeted opening 900 stores in South Africa. We look at the number of shopping centres in the country to assess what further opportunities there may be beyond this 900-store target. The pandemic could bring forward some of its store openings as more retail space becomes available. Despite both CLS and DCP regularly reporting increased market share, we find that their combined scheduled medicine market share had been stagnant for the last three years. This is despite the higher rate of store rollouts. While return on equity has been reducing for the past six years, CLS only reduced its medium-term ROE target range in its latest results. We analyse the components of ROE to assess the cause of this decline and question whether the previous targets would have been achievable.