South African retailer Clicks is expanding its presence in the premium beauty market by increasing its stake in ARC Store to 61%. The deal, worth R507m, will see Clicks acquire an additional 35.3% stake from ARC's founding shareholders. This move is part of Clicks' strategy to grow its exposure to a market valued at over R6bn annually. The transaction is subject to approval from competition authorities.
ARC, founded in 2020, operates 12 stores in major shopping malls and an online business. Its Sandton City store is touted as the largest beauty store in Africa. Clicks first invested in ARC in 2021 and has since developed a commercial relationship with the business through its ClubCard loyalty programme and store network. The partnership has yielded positive results, with spending at Clicks by ARC customers increasing 16% to R836m in the past year.
Clicks CEO Bertina Engelbrecht said the increased ownership would provide the group with greater exposure to the premium beauty market. The acquisition allows Clicks to participate in ARC's future growth while retaining the founders and management who built the business. Engelbrecht highlighted the potential for growth and leveraging the strengths of both ARC and Clicks.
The investment strengthens an existing relationship between the two retailers, with ARC having been an affinity partner of Clicks ClubCard since 2021. Clicks stores are also used as collection points for ARC's click-and-collect service. The deal ensures that ARC's founders and existing shareholders remain invested in the business, while the current executive management has committed to staying until at least 2028.
ARC CEO Jamie Lane emphasized that the ownership change was structured to retain the company's existing culture and management. The deal recognizes the unique ARC culture, which is fundamental to achieving its ambitious goals. Lane's commitment to retaining the company's culture and management is seen as a positive step for the business.
Clicks plans to increase ARC's store network to between 20 and 30 stores over the medium term. The retailer believes there is scope for the two businesses to use their respective strengths as ARC expands. The partnership is expected to drive growth and leverage the strengths of both ARC and Clicks in the premium beauty market.
The transaction marks a significant step in Clicks' strategy to grow its presence in the premium beauty market. With a controlling stake in ARC, Clicks is well-positioned to capitalize on the growing demand for premium beauty products. The deal is expected to yield long-term benefits for both Clicks and ARC.
Key points
- Clicks increases stake in ARC to 61% in R507m deal
- Deal aims to grow Clicks' presence in premium beauty market
- ARC's store network to expand to 20-30 stores over medium term
