Johannesburg - Cashbuild - which supplies building materials to cash-paying customers - is set to expand its footprint through the addition or news stores, and an acquisition.
The group on Tuesday published its results for the year to June and noted the 24 stores it has added since July 2013 helped it grow revenue in a tough trading environment. In the first six weeks of the new trading year, revenue has gained 11 percent year-on-year, leaving management “positive” about its prospects.
Cashbuild, listed on the JSE, currently has 222 outlets, having added 24 since the middle of 2013 - of which nine were opened in the past year.
It notes overall revenue gained 13 percent to R7.7 billion, while operating profit jumped 30 percent to R464.5 million - an increase Cashbuild says is thanks to it containing operating expenses at 11 percent.
Cashbuild notes revenue from stores that existed before july 2013 gained 8 percent, while the 24 new outlets added 5 percent. “This increase for the year has been achieved in tough trading conditions, with selling price inflation of 2 percent.”
Basic earnings per share increased 36 percent to 1 556.8c and headline earnings per share grew 34 percent as headline earnings gained to R352 million.
During the year, the company opened 9 outlets, refurbished 24 stores and relocated 6 stores. It notes 2 stores trading in close proximity to other Cashbuild stores were closed.
Retailers often close or move stores that are close to other outlets to avoid cannibalisation - a process in which foot traffic diverts to the alternative outlet.
It notes its do-it-yourself pilot continues with 11 Cashbuild DIY pilot stores (not included in the 222 total stores number). “Cashbuild will continue its store expansion, relocation and refurbishment strategy in a controlled manner, applying the same rigorous process as in the past.”
In addition to opening new stores, the group is buying P&L Hardware from André Prinsloo Trust and FJP Beleggings for R350 million, plus R80 million if certain profit targets are achieved during a three-year period.
Cashbuild said, when it made the deal announcement last month, that it will expand its footprint and market share, bringing “quality building materials at the lowest prices to the communities in which it trades”.
P&L comprises 39 retail building material and hardware outlets situated mostly in the Limpopo and Mpumalanga provinces of South Africa. The deal is subject to customary conditions.
IOL