Johannesburg - Italtile’s 31 percent rise in turnover from continuing operations in the six months to December was helped by the contribution of nine previously franchised CTM stores, the ceramic supplier and retailer said in a trading update yesterday.
The nine franchise stores were converted to group-owned stores. In addition, a CTM outlet was opened in the period.
Excluding the contribution from these 10 stores, turnover from comparable group-owned stores and entities increased by 15 percent.
Italtile, which owns brands such as CTM, Top T and high-end Italtile retail stores, said it expected basic earnings a share to be between 18 percent and 20 percent higher than the 23.9c recorded in the corresponding period the previous year.
Headline earnings a share would be between 15 percent and 17 percent higher than the previous year’s 24c.
Italtile said both calculations included a R14 million IFRS2 charge, of which R11m was a one-off charge, related to an equity-settled staff share incentive scheme.
The group, which owns 117 stores, also attributed its sound performance to a gain in market share across its merchandise categories.
“While consumers remained highly price sensitive, particularly in the lower- and middle-income segments, the group’s year-round value offering and policy of ‘right product at the right time, place and price’ found favour among homeowners across all categories,” the company said.
Italtile disposed of its eight CTM stores in Australia via a facilitated management buyout during the six-month period. The group sold its property holding company, Allmuss Properties Zambia, achieving R4.4m in the transaction.
It disposed of Cladding Finance, a niche provider of outsourced debtors’ solutions, during the accounting period.
Daniel Isaacs, an analyst at 36One Asset Management, said Italtile’s trading update was good, especially compared with some of its competitors and in light of the current pressure on consumers.
He added that a 16 percent growth in earnings was a very good number in this environment, and growth was probably about 20 percent when taking into account the one-off charge related to the incentive scheme.
“They are definitely taking market share by offering a great product and range,” Isaacs said.
But he said Italtile’s products, which were all imported, would experience margin pressure with the continuing weakening of the rand.
The group said it expected to publish its half-year results on February 13.
Italtile shares gained 1.32 percent to close at R7.70 in Johannesburg yesterday.