The cost of KZN turmoil More than R720 million in clicks; a significant dent in its profit
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The disturbance in KwaZulu-Natal in July had a significant impact on Clicks, with the company lowering its planned annual profit growth from 8% to 13% – to practically zero. In the province, 6 percent of the company’s stores — 52 Clicks and one The Body Shop – were looted and vandalized. There are still 11 stores that are closed. The first nine stores should open this fiscal year, with the final two damaged locations opening in the fiscal year 2023.
Both the UPD and Clicks distribution centres in KwaZulu-Natal were looted and destroyed, but have now reopened. Private security services were hired to protect the distribution centres, and air transportation fees were expended to transfer pharmaceuticals from Johannesburg to KwaZulu-Natal. Clicks has filed a R726 million claim with Sasria, comprising R522 million for stock loss and R182 million for fixed asset replacement.
Sasria has already paid the group R217 million, which will be reported for in the 2021 fiscal year, which ended in August. The remainder will be recognized the next year. In April, Clicks predicted a rise in diluted headline profit of 8% to 13% for the fiscal year ending in August. However, due to the impact of the civil upheaval and the fact that only 30% of the total Sasria insurance claim has been accounted for, the group now anticipates its earnings for the fiscal year ending 31 August 2021 to climb by 0% to 3%. Profit would have been in line with the prior 8 percent to 13 percent range if not for the civil disturbance, according to Clicks. The group’s turnover from continuing activities climbed by 10.2 percent despite the closure of Musica in the previous year (compared to growth of 10.5 percent in 2020).
Over the last year, sales at Clicks, Body Shop, GNC, and Claire’s climbed by 8.3 percent (8.4 percent in 2020). Its pharmaceutical distributor UPD grew its turnover by 12.3% (2020: 11.2%) over the previous year. “Sales in the last seven weeks of the financial year were significantly impacted by the civil unrest in KZN. In addition to the store closures due to damages and the temporary store closures at the peak of the violence, trading in the affected areas remains well below the levels of the previous year and this is expected to continue in the short term,” Clicks warned.
Clicks has now administered almost 600 000 vaccinations at 300 sites, and plans to open a further 268 sites in the coming weeks.