New Clicks Holdings Ltd.
New Clicks Holdings Ltd.
P.O. Box 5142
Telephone: (27 021) 460 1911
Fax: (27 021) 461 8221
Web site: http://www.nuclicks.co.za
Incorporated: 1968 as Clicks
Sales: ZAR 10.46 billion ($1.3 billion) (2006)
Stock Exchanges: Johannesburg
Ticker Symbol: NCL
NAIC: 424210 Drugs and Druggists’ Sundries Merchant Wholesalers; 451220 Prerecorded Tape, Compact Disc, and Record Stores; 812112 Beauty Salons
New Clicks Holdings Ltd. is the holding company behind one of Southern Africa’s leading retail groups, with operations throughout South Africa, as well as in Botswana, Swaziland, and Namibia. New Clicks expects its total retail network to reach 700 stores by the end of 2007, including some 34 stores expected to open during that year.
New Click’s flagship retail network operates under the Clicks and Clicks Pharmacy names, adopting a U.S.-style drugstore approach featuring variety store goods and, in the case of the pharmacy-equipped stores, full drug-dispensing departments. The Clicks chain of more than 320 stores, including 100 Clicks Pharmacy stores, represents nearly 50 percent of the company’s turnover, which topped ZAR 10 billion in 2006.
The company’s Discom chain of 179 stores targets the lower- to middle-income consumer bracket with health and beauty care products, as well as decorative home furnishings, and generates 10 percent of the company’s sales. New Clicks is also a leading music retailer in South Africa, boasting as much as two-fifths of the total marker through its Musica and Musica Megastore (formerly CD Wherehouse) chains. With more than 140 stores, New Clicks has begun repositioning the Musica format toward a broader entertainment mix, including sales of DVDs and the like. New Clicks also operates the chain of The Body Shop in South Africa, as well as the Style Studio hair salon chain.
In addition to its retail operations, New Clicks is also South Africa’s leading pharmaceuticals and pharmacy products distributor, through its control of New United Pharmaceutical Distributors (UPD). Through UPD, New Clicks also intends to begin encouraging its independent pharmacy customers to enter the Clicks chain through franchising agreements. At the end of 2006, however, only 14 stores in the total Clicks chain were not company owned. New Clicks Holdings is listed on the South Africa stock exchange and is led by former Boots plc executive David Kneale.
DRUGSTORE DREAM IN 1968
Jack Goldin had already built a successful career in retailing in the 1960s, including the ownership of four small Cape Town–area stores under the Pick n’ Pay name. In 1967, however, Goldin sold the chain to Raymond Ackerman for R620,000. Ackerman then went on to build the Pick n’ Pay chain into South Africa’s leading food, clothing and general merchandise retail group.
In the meantime, the sale of the Pick n’ Pay chain enabled Goldin to pursue his own retailing dream of establishing an American-style drug store, featuring health and beauty items, over-the-counter medicines, and general merchandise, as well as a dispensing pharmacy, such as found in the United States. In 1968, Goldin opened his first store, called Clicks, in Cape Town.
Goldin’s dream was thwarted, however, due to South African legislation that severely restricted the pharmacy market in South Africa. In particular, the legislation disallowed corporate ownership of retail dispensing pharmacies, helping to protect the independence of the country’s pharmacists. Undaunted, Goldin continued to build the Clicks format of a drugstore-without-the-drugs into a nationally operating chain. By 1971, Goldin had opened its first store outside of the Western Cape region. At the end of that decade, Goldin’s company, which went public as Clicks Stores Limited in 1979, operated 31 stores for total sales of more than ZAR 50 million. The listing on the Johannesburg Stock Exchange enabled Goldin to accelerate the growth of his company, and by the middle of the 1980s, Clicks had topped 50 stores.
The company had also launched its expansion into other retail markets. In 1984, the company acquired the Diskom chain of stores. This company, which operated 11 stores, specialized in providing health and beauty products to lower- and lower-middle income consumers, targeting especially the so-called ethnic markets. Under Clicks, the chain was rebranded as Discom, then expanded across South Africa before entering neighboring markets in southern Africa. By the 2000s, the Discom chain itself had grown to nearly 180 stores.
NEW OWNERS IN THE 1990S
Clicks underwent a series of changes of ownership in the late 1980s and into the 1990s. That process started when the company brought in Trevor Honeysett as managing director in 1987. Honeysett was to remain at the head of the company into the middle of the first decade of the 2000s. Goldin continued as company chairman following Honeysett’s arrival, and remained chairman even after he sold control of Clicks to the Score Food Group in 1988. In 1991, however, Goldin resigned the chairmanship and emigrated to Australia. There he joined the pharmacy chain Priceline, which had been founded in 1982, helping to reshape it to mirror the Clicks format.
Under Honeysett, Clicks stepped up its expansion, growing rapidly to more than 150 stores by the beginning of the 1990s. By 1991, the company’s annual sales had topped R500, and the group was a leader in its retail category. Building on this position, the company sought out a new market at the beginning of the decade. In 1992, Clicks acquired Musica, the leading retail music store chain in South Africa. That purchase not only helped boost the company’s sales to 330 stores by 1994, it also enabled the group to post revenues of more than ZAR 1 billion that year.
By then, Clicks had found itself under new ownership, when the Premier Group Ltd. acquired control of the company in 1992. Yet that relationship did not last long—in 1995, Clicks was sold to Malbak Limited, which set up a holding company for the acquisition, called New Clicks Holdings Limited. Malbak, one of South Africa’s leading industrial conglomerates, was itself a subsidiary of the country’s insurance giant Sanlam.
The Clicks brand is South Africa’s leading specialist retailer of health, beauty and lifestyle products, servicing the middle to upper income market. Clicks is a contemporary, accessible retailer that understands women and offers them great prices and more for their money. Our vision is to create an experience in pharmacy that has never been seen before in South Africa, combining the best of Clicks with the best of pharmacy, together with a one-on-one relationship between the pharmacist and the customer. Discom aims to be the country’s leading urban lifestyle brand specialising in African beauty and decorative homewares. The African beauty component focuses on ethnic hair care, which is supported by homeware merchandise and small electrical appliances. Discom’s niche differentiates the brand from Clicks, which is positioned as a health and beauty-focused drugstore. Price continues to be a key factor in Discom’s market and the brand strives to provide value for money through quality merchandise and constant innovation.
New Clicks’ existence under Malbak proved short-lived, however, as the company launched an “unbundling” exercise into the second half of the decade. This restructuring refocused Malbak as a packaging company and paving the way for its merger with rival Nampak. As part of the unbundling effort, New Clicks was relisted on the Johannesburg Stock Exchange in 1996, while remaining controlled by Malbak. Then, in 1997, Malbak sold its shareholding in New Clicks. The company then became an independent company for the first time in nearly a decade.
New Clicks lost no time in returning to its own expansion drive. In 1997, the company bought another music retailer, Compact Disc Wherehouse. New Clicks then expanded the CD Wherehouse format, which featured a more extensive catalog than Musica, including a strong import titles offering from a single store into a growing chain, with four stores including two in Johannesburg, and one each in Durban and Cape Town. The addition of CD Wherehouse helped New Clicks become a dominant player in the South African music retail sector, accounting for some 40 percent of the total CD market.
The company also sought further expansion outside of the South African market. Australia became the company’s new foreign target, and in 1998, New Clicks bought out the Priceline drugstore chain. By then, Price-line had grown into a chain of 70 stores. The acquisition helped boost New Clicks’ total holdings to nearly 540 stores for the year, generating revenues of more than ZAR 2 billion.
SOUTH AFRICAN RETAIL LEADER IN THE 21ST CENTURY
New Clicks continued its acquisition drive into the dawn of the 21st century. The company acquired a 30 percent stake in Link Investment Trust, which oversaw more than 300 drugstores in South Africa, in 1999. By the middle of the next decade, New Clicks had gained control of Link Investment, raising its share to 56 percent. The company also entered KwaZulu-Natal in 1999, buying the Modisons retail group, which operated a discount format similar to Discom. The Modisons stores were then rebranded under the Discom format. Meanwhile, the company added a more upscale retail format to its South African operations, acquiring the South African franchise for The Body Shop retail brand in 2001.
By then, the company had launched a new strategy to build its holdings in Australia, targeting growth into one of that country’s major health, beauty, and lifestyle products companies. In 2000, the company added the home furnishings franchise group, House, which operated through 66 retail stores. This was followed by the purchase of the 94-store hair care franchise network Price Attack in 2002.
Meanwhile, pressure had been building on the South African government to reform legislation covering the pharmacy market in order to allow corporate ownership of pharmacies. In preparation for this eventuality, New Clicks extended its operations into the wholesale sector, acquiring United Pharmaceutical Distributors in 2002. The purchase provided the company with access to most of the country’s independent pharmacies and was seen as a step toward building the company’s own network of franchised pharmacies.
At last, in 2003, the South African government passed new legislation allowing for the corporate ownership of dispensing pharmacies. Clicks immediately began plans to convert part of its Clicks store chain into a new expanded format, called Clicks Pharmacy, announcing plans to spend as much as ZAR 100 million over the next four years to convert its stores. The company also boosted its position in the market, buying rival pharmacy group PM&A in 2003. The first Clicks Pharmacy opened for business in Cape Town in 2004.
- Jack Goldin opens first Clicks store with intent of developing an American-style drug store format for South Africa.
- Clicks Stores Ltd., with more than 30 stores in operation, lists shares on Johannesburg stock exchange.
- Company acquires Diskom (later Discom) discount retail health and beauty chain.
- Score Food Group acquires control of Clicks.
- Clicks expands into music retailing through acquisition of Musica chain.
- New Clicks Holdings is formed in buyout of Clicks by Malbak Ltd. in 1995 and is spun off as independent and public; company acquires CD Wherehouse store in Johannesburg.
- Clicks acquires United Pharmaceuticals Distributors, adding wholesale distribution operations.
- After new legislation allows corporate ownership of drug-dispensing pharmacy, New Clicks opens first Clicks Pharmacy.
- Four CD Wherehouse stores are converted to new Musica Megastore format.
The prospects of new growth in South Africa led New Clicks to decide to exit its Australian holdings that year. New Clicks Australia was then sold in a management buyout, raising ZAR 240 million for the South African company. While the sale cut New Clicks’ store portfolio in half, dropping its total back to just 680 stores, the addition of pharmaceutical sales enabled the company to post continued revenue growth; by the end of its 2004 year, the company’s sales topped ZAR 8 billion.
With the rollout of the Clicks Pharmacy chain well underway through 2005 (with the 100th dispensary opened in July 2006) the company’s sales jumped again, topping ZAR 10 billion at the end of its 2006 fiscal year. Part of that growth was attributed to the arrival of former Boots plc executive David Kneale, who took over as the company’s managing director after Honeysett’s retirement. Kneale set out to streamline parts of the group’s operations, including establishing a more efficient, centralized distribution system for the company.
New Clicks also moved to rationalize its retail music operations. At the same time, faced with pressure from the growing popularity of Internet-based music sales, as well as the rising toll of illegal music downloads, the company moved to create a new “retail entertainment” format. As part of this effort, the company converted the former CD Wherehouse stores into the new Musica Megastore format. The new format added an expanded selection of DVDs, as well as gaming and game console–oriented merchandise. By the beginning of 2007, New Clicks oversaw a growing empire targeting what the company called the retail “lifecare” market, and had emerged as one of southern Africa’s leading retail groups.
M. L. Cohen
Clicks Stores (Lesotho) (Proprietary) Ltd.; Clicks Stores (Western Cape) (Proprietary) Ltd.; Leon Katz (Proprietary) Ltd.; Milton & Associates (Proprietary) Ltd.; Multicare Pharmaceutical Benefits Management (Proprietary) Ltd.; New Clicks South Africa (Proprietary) Ltd.; New United Pharmaceutical Distributors (Proprietary) Ltd.; Purchase Milton & Associates (Proprietary) Ltd.; Safeway (Namibia) (Proprietary) Ltd.; Safeway (Swaziland) (Proprietary) Ltd.; The Clicks Group Finance Company (Proprietary) Ltd.; The Clicks Organisation (Botswana) (Proprietary) Ltd.
Adcock Ingram Ltd.; National Match Co.; AVI Ltd.; Aspen Pharmacare Holdings Ltd.; National Brands Ltd.; Avroy Shlain Cosmetics (Proprietary) Ltd.; Reeva Beauty and Health Products (Proprietary) Ltd.; Vital Health Foods Proprietary Ltd.; Ingelheim Pharmaceuticals (Proprietary) Ltd.; Crest Chemicals (Proprietary) Ltd.
“Besieged Retailer New Clicks Sees Its Shares Slump,” Africa News Service, April 8, 2005.
“Boots Man Makes Clicks Slick Again,” Business Times, May 11, 2006.
Hall, Wendy, “New Systems to Deliver Growth for New Chicks,” Business Day, April 1, 2007.
“New Clicks ‘In a State of Transition,’” Africa News Service, January 4, 2005.
“New Clicks Looking Strong,” I-Net Bridge, January 11, 2006.
Pile, Jacqui, “New Clicks: Adding to the Chemistry,” Financial Mail, July 19, 2002.
“Smaller New Clicks Pharmacies ‘To Close if Pricing Rules Stay,’” Africa News Service, January 29, 2005.
“Virgin, New Clicks May Butt Heads,” Star, September 1, 2006, p. 3.