Cashbuild is still opening new stores, despite subdued consumer spending. Photo: Simphiwe Mbokazi/African News Agency (ANA)

DURBAN – Cashbuild is still opening new stores, despite subdued consumer spending coupled with a low economic growth impacting its bottom line. 

For the year to June, the group reported a 9 percent decline in headline earnings to R424 million. 

Cashbuild shares closed 3.21 percent lower on the JSE yesterday at R302.94.

Shane Thoresson, the group’s operations director, said the period under review had been very difficult for the retailers in the country as they have hardly seen any growth. 

“As for our company, we serve lower LSM markets, and when there is a rise in fuel price and an increase in value added tax it affects our consumers and they reduce their spending,” Thoresson said. 

Business and consumer confidence that was up at the beginning of the year has since died down, he said.  

The group is Southern Africa’s largest retailer of quality building materials and associated products and it sells directly to a cash-paying customer base through its constantly expanding chain of stores. 

Despite the challenging environment the group managed to grow its number of stores to 318 stores. During the period Cashbuild opened 25 new stores, 11 Cashbuild stores, six P&L Hardware stores and acquired eight stores which were converted to P&L Hardware stores, refurbished 27 stores and relocated six Cashbuild stores.

Thoresson said Cashbuild would continue its store expansion, relocation and refurbishment strategy in a controlled manner, applying the same rigorous process as in the past.

Going forward, Cashbuild said the outlook was not looking better as the first six weeks after the reporting period only saw revenue increasing by 1 percent. 

Chief executive Werner de Jager said management believed trading conditions would remain extremely challenging in the near to medium term. 

“However, Cashbuild is well-placed to take advantage of any positive change in the economy through our extensive network of stores and our in-depth quality product range, which is tailored to the specific needs of the communities we serve,” De Jager said. 

Revenue increased by 5 percent to R10.2 billion, up from R9.7bn, while operating profit declined by 12 percent to R543 million as compared to last year. 

De Jager said this was once again a difficult year, with results deteriorating even more in the second half. 

“Revenue for the stores that were in existence before July 2016 remained at similar levels to last year, with the 42 new stores opened since then largely responsible for the 5 percent increase,” De Jager said. 

The net asset value per share increased by 14 percent to 7 578 cents a share, up from 6 642c compared to last year. 

Headline earnings a share declined by 9 percent to 1 867c a share and the group declared a dividend of 842c, down from 9 percent compared to last year. 

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- BUSINESS REPORT