Italtile maintains strong growth as it keeps a lid on costs

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BR Italtile 21(1) Independent Newspapers CTM salesman Bennie Sibanda assists customers at an outlet in Johannesburg. Italtile plans to open one new CTM store and five TopT stores in the current financial year. Photo: Supplied

Nompumelelo Magwaza

CONTAINMENT of supply chain costs, including transport and labour charges, had assisted Italtile in maintaining its double-digit growth, the listed tile and sanitaryware retailer said yesterday.

System-wide turnover from continuing operations in the year to June rose 17 percent to R4.4 billion. This was the result of a deliberate strategy to capture costs in the supply chain as well as maintain competitive pricing in stores, Italtile said.

The group’s trading profit grew 23 percent to R751 million with earnings a share up by 19 percent to 57.4c and headline earnings a share up 24 percent to 58.7c.

Despite the persisting slowdown in consumer spending, Italtile was able to maintain market share and grow profit.

“We offered consumers a deal and we managed to act fast when the rand started to weaken at the beginning of the calendar year. We already had local suppliers supplying a large amount of our products,” chief executive Nick Booth said.

This gave Italtile an opportunity to hold pricing at the cost of some margin, but it managed to absorb some of that margin back into the supply chain, Booth explained.

Italtile was also supported by its property investment portfolio and vertically integrated supply chain.

Booth said Italtile had created a lot of partnerships with tile and product manufacturers to help boost the back end of the business.

Italtile, which owns 20 percent of Ceramic Industries, said this kind of partnership gave it access to a variety of products at the right time.

“The availability of product makes sure that we are able to offer different types of tiles [and] homeware to diverse customers in the different regions,” he said.

The group has 115 CTM, Italtile and TopT stores, split into a ratio of 60 percent corporate stores and 40 percent franchised stores. It plans to open five TopT stores and one CTM store in the new financial year.

Booth was concerned about the slowing down of infrastructure projects, especially the development of residential areas.

“There is no doubt that there has been some constraint in the market and with the lack of infrastructure projects, especially around housing, our performance might be affected in future,” he said.

Italtile slid 0.55 percent to close at R9.15 yesterday.

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