Investors in Clicks Group LTD (CLS) express frustration with stagnant price action and suspect a stop loss raid, with some debating optimal entry timing as the stock struggles to gain momentum.
I need to flag something on the margin narrative here. Clicks' like-for-like growth has been decent but the gross margin compression in the last set of results was real, and I haven't seen the guidance to suggest that reverses soon. At 220.54 the valuation looks fair rather than compelling, especially with the Dis-Chem pressure on pricing not going away. Long term the defensive play still holds, pharmacy footprint is hard to replicate, but I'm watching Q2 numbers closely before adding.
CLS at 220.54 is interesting given the margin pressure they've had, but the pharmacy business itself is resilient through cycles, unlike pure discretionary retail. Compare it to what Dis-Chem's had to deal with on similar fronts and Clicks' scale gives them pricing power. Long term the beauty side keeps growing, load-shedding hits everyone equally, so I reckon they'll work through this. Positioned perfectly for when consumer confidence steadies.
CLS getting squeezed between load-shedding hurting foot traffic and the rand making imported beauty stock cheaper. Margins compressed, same story as the last two results. At R220.54 you're paying for a turnaround that hasn't shown up yet, where's the actual growth driver.
clicks holding up better than i expected given the retail squeeze. r220.54 is still reasonable if you believe in the pharma moat and their beauty segment margins. reckon they've got legs longer term than takealot or the big department store plays, just need to survive the next couple years of margin pressure without eskom taking them offline for 6 hours a day.
CLS up 0.41% feels like dead money given the margin pressure in pharmacy and the retail headwinds. The dividend yield doesn't compensate for the structural challenges facing the group, and I reckon the market's being too generous here.
Clicks at 210.77 is pricing in a lot of hope given the margin squeeze in retail. Pharmacy mix helps but you're fighting foot traffic and Dischem on price every day. Long term the model works if they can fix costs, but near term feels like you're paying for a turnaround that's still in progress.
Been holding CLS for a while now and the 210.77 close doesn't bother me much. Clicks still has the pharmacy franchise locked down pretty tight in SA, and that's not something that gets disrupted overnight. Similar to how Pick n Pay held its ground through rough patches. The real question is whether they can push margins on the beauty side while load-shedding keeps crushing foot traffic. Long-term view hasn't changed though, I'm not selling at these levels.
CLS sitting at 210.77 and the yield's starting to look decent if they can hold their margins. Problem is they're fighting it out with Takealot and Superbalist on beauty stuff now, that's a real headwind. Still, the pharmacy side's got moat, but need to see if earnings can surprise on the upside next reporting.
The margin pressure on CLS has been real, but it's worth stepping back. Clicks still moves more volume than Dischem and holds better positioning in the pharmacy channel, which is harder to disrupt than beauty. At 210.77 the valuation isn't screaming value, but if they can stabilise input costs and the loyalty program sticks, there's a decent runway here. I'm not rushing in, but I'm not selling either.
CLS sitting at 210.77 and everyone's moaning about the margin pressure but these guys are still printing cash from the pharmacy network. Look at what happened to Dis-Chem, they got hammered way worse and still recovered because the model works. Retail health and beauty in SA isn't going anywhere, we just need them to sort the input costs and show some discipline on the beauty side.
Clicks has been solid on margins but ag man, same-store sales growth has stalled. The pharmacy business keeps the lights on but where is the real growth driver, especially with Takealot and Superbalist eating into the beauty side. At 210.77 you're paying for a reliable dividend machine, not a compounder.