JSE-listed healthcare, electronics and child retailer Clicks says the difficulty on the nation’s ports – following the wage-related strike at Transnet – in addition to supply-chain disruptions linked to China’s Covid-related lockdowns will not affect its Christmas inventory, nor disrupt festive season shopping for shoppers.
“Our inventories remain at healthy levels,” Clicks CEO Bertina Engelbrecht tells Moneyweb.
She says classes discovered from supply-chain disrupting occasions such because the Covid-19 pandemic in 2020, the July unrest final yr, and extra just lately Russia’s invasion of Ukraine in February in addition to China’s strict coverage on Covid-related restrictions that resulted within the irregular provide of products, have taught retailers to plan forward to keep away from empty shelves.
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“Retailers make decisions on Christmas between April and July … In fact, we go through a tremendous process to decide what the ranges are going to be, what the price-points are going to be so our planning is on track for our festive season trading period.”
For the 2022 interval, whole group stock days had been six days greater than reported in 2021 – coming in at 72 days, up from 66 days in 2021.
Inventory days measure how lengthy a product stays in storage earlier than ultimately being offered to the patron. For its retail operations, stock days had been barely decrease this era at 71 days down from 74 days. This decline Clicks says is as a result of the earlier yr accounted for Covid-19 vaccine inventory which has since lowered consistent with decreased uptake of the vaccine.
Clicks CFO Michael Fleming additional notes: “Both local and global disruptions to supply chains continue to persist and we’ve therefore bought in certain imported Christmas stock earlier this year to ensure supply over the key festive trading period which has added about one day to current retail inventory days.”
According to Engelbrecht, the group has ensured it may possibly maintain further inventory not solely in preparation for the busy festive season, however to additionally shield its shoppers from price-shocks pushed by dwindling provide on account of supply-chain disruptions.
Pricing pressures
Executives at Clicks say the group has stored its inside promoting worth inflation at 4%, barely above the three.2% it reported for its monetary full-year to end-August 2022. However, they stress that that is nonetheless significantly beneath the headline consumer-price index of seven.5%, which was reported by Statistics SA on Wednesday.
The group additional notes that given the present inflationary atmosphere, shoppers are anticipated to proceed feeling the pinch.
Read: Inflation slows however rates of interest set to rise … once more
“Trading conditions will remain extremely constrained owing to the increasing pressures on consumer disposable income in the current low growth, high inflationary environment,” group provides.
Clicks says it will proceed to do what it may possibly to defend its shoppers from larger costs, and ship the worth anticipated at aggressive costs. However, the retailer does be aware {that a} key problem to this stays the nation’s unstable energy provide which has contributed to larger group working prices.
According to Engelbrecht, the group misplaced as much as 34 000 buying and selling hours in FY 2022 on account of load shedding – up from 13 000 hours within the prior yr.
As a end result, the group has dedicated to investing in various vitality sources. During the monetary yr, the group put in photo voltaic panels at its Clicks and UPD distribution centres across the nation.
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FNB Wealth and Investments portfolio supervisor Wayne McCurrie tells Moneyweb that Clicks has delivered a powerful full-year efficiency, including that the corporate continues to be a great purchase for these trying to get in. However, he did warning in opposition to its share worth.
“Clicks have had fantastic results for a very long time. The only problem with Clicks is that their share price always looks expensive,” provides McCurrie.
“I’m not saying that it will, but if something ever goes wrong there, that share price is priced for perfection so you’re going to see a dramatic fall in the share price, that is my only worry about Clicks.”
McCurrie says that it’s essential to have a look at Clicks’s reported load shedding affect inside context. He factors out that regardless that the group says it has misplaced over 30 000 buying and selling hours as a consequence of energy cuts, this loss is comparatively minimal compared to companies within the manufacturing and mining sectors which not like Clicks can’t produce output throughout these load shedding instances.
“If you had been going to purchase a toaster at Clicks, you had been simply going to purchase when there isn’t a load shedding, so the loss in turnover just isn’t proportional to the variety of hours you couldn’t commerce.
“Obviously load shedding has a negative effect on everyone in South Africa … However, with a company like Clicks, it’s not as negative as for say a manufacturing firm.”
Listen as Engelbrecht discusses the group’s newest full-year outcomes: