Johannesburg - Italtile planned to expand in the lower end of the market with its TopT offering in the next few years, chief financial officer Brandon Wood said yesterday. This was despite a slowdown in consumer spending experienced by many retailers.
The group would roll out 10 of its lower-end TopT stores a year over the next five years in areas of high traffic, such as taxi ranks and business hubs.
“We find that the lower-end consumers are underserviced and we are positive about that market,” Wood said.
The group’s full-year results showed that consumers at the lower and higher ends were fairly resilient, while the middle-income earners had declining disposable income.
Italtile’s brands include CTM, TopT and the higher-end Italtile retail stores. The stores cater to consumers in the living standards measures 3 to 10.
Revenue from group-owned stores grew by 16 percent to R2.05 billion in the six months to June compared with a year earlier. Headline earnings a share grew 16 percent to 47.3c.
The company reported a system-wide turnover increase of 11 percent to R3.82bn, up from R3.43bn in the year before.
Wood said the group’s strategy was to offer the best value for money by selling a range of products that were both fashionable and affordable.
The ceramics supplier said gross margins declined for the full year due to in-store inflation that was introduced in some of its lower-end brands, such as CTM and TopT. Italtile’s tap business, ITD, also experienced internal inflation.
Online sales grew markedly with about 60 000 unique visitors on the group’s websites in the reporting period.
“Consumers are still a little apprehensive to buy online, as some may prefer the aspect of touch and feel that you get in the stores,” Wood said. But he added that this reluctance was likely to subside along with the international trend.
Italtile said one of the keys to the group’s improvements was a focus on in-store service where workers were trained to be more efficient and hands-on.
Last month Italtile appointed Nick Booth as chief executive after founder and chairman Giovanni Ravazzotti stepped in after his son Gianpaolo died in a 2011 plane crash.
Italtile has 117 stores, of which 62 are operated by franchisees. The stores include seven in Australia and 17 in the rest of Africa. Five stores were opened in the reporting period.
Dividends were increased by 14 percent to 16c a share.
The stock leapt 8.15 percent, the steepest gain in a year, to close at R6.50. Over 900 000 shares were traded, or 2.8 times the three-month daily average, Bloomberg data showed. - Business Report