Clicks: It’s a mystery, but it works
No doubt there are frequent flyers who can navigate their way around a Clicks store with the assurance of Shackleton setting off for South Georgia. But for the uninitiated the experience is similar to the complete confusion of a gaijin attempting to grapple with the Tokyo subway for the first time. At least in Tokyo you need spend no more than a minute or two standing around like a moron before you will be surrounded by helpful locals who will walk you through the ticketing system and guide you to your platform, an experience that I suspect is rarely the case in Clicks.
Perhaps the impenetrable logic of the Clicks aisle allocation is based on the Aldi principle, which thrives on the idea that you go in for a loaf of bread and come out with an excellent deal on a wetsuit, a power hose and a lifetime supply of blister plasters, but whatever the thinking behind it, it keeps on producing the goods. It’s the retail equivalent of piling anchovies into a leg of lamb before you roast it — you don’t need to think too hard about why it works, but it does every time.
Despite a bewildering list of external headwinds, the company still managed to grow group diluted headline earnings per share by 33.5%, a number that most companies would be proud of when markets were booming. It stresses the resilience of its business model and the defensiveness of its core retail categories, but the strongest recovery came from the beauty sector, as well as its exalted status as the largest vaccination provider in the private sector.
Snap: Sinking — and out of focus
If granny asks you where to stick her life savings, you are faced with a binary choice. You could take the traditional approach, pointing her towards a nicely balanced portfolio that may never shoot the lights out but won’t disappoint too badly on the downside. Or, if you feel that prolonged end of life care represents too much of a burden on health-care providers and you fancy an accelerated inheritance, you could tell her to bung it all into Snap, hide the defibrillator and start getting the quotes in for a lovely funeral.
Showing the sort of extreme volatility that is normally found only in the more obscure reaches of the periodic table, Snap, the US camera and social media company, has managed single-day double-digit percentage drops an impressive five times this year. It fell a miserly 10.2% on January 13, before getting going with 23.6% on February 3, hitting its stride with 43% on February 24, another impressive 39% on July 22, and topping it off with 28.1% on October 20 after it posted the worst revenue growth rate in its history, despite strong user growth.
Net losses jumped 400% to $360m, including $155m in charges for a brutal restructuring that included waving adios to 20% of its workforce and slashing investment in noncore projects such as augmented reality glasses and video content production. The real problem was that advertisers continued to cut budgets in response to macro headwinds as inflation and capital costs went through the roof. Apple’s privacy changes have made it harder for advertisers to target and measure the success of campaigns, and Snap will need to adapt at speed.