TRADING UPDATE FOR THE FOUR MONTHS ENDED DECEMBER 2008
HIGHLIGHTS
· Clicks turnover up 13.1%
· Retail sales up 11.1%
RETAIL TRADING
Retail sales increased by 11.1% for the four months ended December 2008, with a particularly pleasing trading performance from the flagship business, Clicks, which lifted turnover by 13.1% and by 11.2% on a same store basis.
The strong value offer in Clicks continues to appeal to consumers who are under financial pressure. The smaller gifting ranges across the confectionery, toiletry and beauty categories were well suited to the needs of consumers at this time and resulted in robust festive season trading. Health (including dispensary) and beauty merchandise continue to be the major drivers of sales growth. Clicks posted real sales growth of 7.4% after recording inflation of 5.7%.
The slowdown in consumer spending was evident in Musica which offers more discretionary merchandise. Musica’s performance was impacted by slower sales of DVDs and gaming software, although the business continued to record market share gains during the period.
The Body Shop performed reasonably well in the current environment, with sales of smaller gifting ranges again proving popular.
Consumers were more discerning and conscious of how they spent their money over this Christmas period. In seeking out value for money, shoppers focused on smaller, more practical gifts. They left their shopping late and also appear to have deferred purchases to the post Christmas period and into early January.
UPD
The strategy adopted by UPD in the previous financial year to focus on its more profitable and loyal customers has resulted in sales growth slowing to 3.7% for the four month period, in line with expectations. This focus on more profitable customers will enable UPD to drive further efficiencies from the business.
GROUP SALES
Total sales for the group increased by 6.1% to R4.1 billion, with inflation for the 17 week period measuring 3.9%.
The business unit split is as follows:
| Four months to December 2008 (Rm) | Four months to December 2007 (Rm) | Total sales growth | Same store sales growth (%) |
Inflation (%) |
Clicks | 2 431 | 2 149 | 13.1 | 11.2 | 5.7 |
Musica | 398 | 397 | 0.3 | 0.1 | 5.0 |
The Body Shop | 42 | 38 | 8.7 | 1.2 | 10.5 |
Total retail | 2 871 | 2 584 | 11.1 | 9.4 | 5.7 |
UPD | 1 616 | 1 558 | 3.7 |
| 0.8 |
Less intragroup turnover | (362) | (255) | 41.7 |
|
|
Total group | 4 125 | 3 887 | 6.1 |
| 3.9 |
Retail trading conditions are expected to remain challenging in 2009 with continued pressure on consumer expenditure, despite relief from the declining fuel price and further expected cuts in interest rates. The group is, however, confident of achieving the strategic objectives and financial targets set out in the 2008 annual report.
The information contained in this trading update has not been reviewed or reported on by the group’s auditors. New Clicks’ interim results for the six months to 28 February 2009 will be released on SENS on or about 30 April 2009.
