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South Africa’s Clicks switches sound off at retailer Musica as Covid speeds up ‘inevitable demise’

It is the end of an era for retail group Clicks after the company announced the impending closure of its entertainment brand, Musica.

Clicks cited digital disruption and admitted Covid-19 “had accelerated the inevitable demise” of Musica.

However, the group’s health and beauty, and pharmaceutical and health medicine distribution divisions have all performed well, according to the company’s latest trading update.

Closing time

All Musica stores will close from 31 May 2021. Since the start of the year, 19 Musica stores have shut down while another 59 are currently trading. The rest of the stores will follow suit as leases expire in the four months leading up to the May 2021 deadline.

Musica has been part of the Clicks Group since 1992. It has been South Africa’s leading music and entertainment retail brand.

But it has been operating in a declining market for years “owing to the structural shift globally to the digital consumption of music, movies and games from the traditional physical format,” says the company. “The inevitable demise of the brand has been accelerated by Covid-19, which resulted in the rapid decline in foot traffic in destination malls where Musica stores are located.”

No job losses anticipated

The store closures will not result in job losses, in a country where the official unemployment rate is in the double digits.

Some Musica stores have been closed since September 2020 and the staff from these outlets have been absorbed in the group’s “expanding health and beauty store network”.

Management is committed to accommodating the remaining staff within the group where this is operationally feasible,” Clicks assured.

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Rest of divisions show resilience

In its other divisions, the listed company reports that retail health and beauty sales, including Clicks, The Body Shop, GNC and Claire’s, increased 8% in the 21 weeks to 24 January.

Increased demand from private hospitals and independent pharmacies for medicines and healthcare products during the second wave of Covid-19 drove up United Pharmaceutical Distributors’s (UPD) turnover by 10.6%.

“Total managed turnover – combining UPD’s wholesale turnover and turnover managed on behalf of bulk distribution clients – increased 18.1% as the business traded well and benefited from distribution contracts gained in the prior year,” according to the group.

Overall, group turnover increased 7.8% to R14.6bn ($975.6m).

The second wave

Clicks Group CEO Vikesh Ramsunder said the business showed resilience as the second wave of Covid-19 gathered momentum across South Africa.

“Clicks reported good growth in front shop health sales as customers focused on preventative healthcare to boost their resistance levels with immunity-building vitamins and supplements,” Ramsunder told media.

“Online sales in Clicks continued their strong growth trajectory, increasing 173% over the previous year as shoppers opted for the convenience of home delivery to reduce the risk of contracting Covid-19,” concluded Ramsunder.

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