Cashbuild store openings soften pain of subdued spending
DURBAN – Cashbuild continued to feel the effects of the subdued consumer spending in South Africa in the first three months of the year, with its first quarter revenue rising by 2 percent boosted by new stores opening.
The largest retailer of building materials and associated products said it had opened 14 new stores from July last year, which contributed to the 2 percent increase compared to the same quarter last year, while the 303 existing stores remained at similar levels as of last year.
“Transactions for the Cashbuild Group increased by 1 percent, with new stores increasing by 3 percent and existing stores decreasing by 2 percent,” the group said in a voluntary trading update released to the market yesterday.
Its selling inflation was 3 percent during the quarter when compared to the quarter ending September last year and gross profit margin percentage for the group remained at similar levels to those of the same quarter last year.
However, Cashbuild managed to increase its store network in the quarter by adding three new stores of which two of those were added in Cashbuild and one P&L Hardware to its portfolio.
It refurbished one Cashbuild store and closed one Cashbuild store at the expiration of its lease agreement bringing the total number of stores trading at the end of the quarter to 317.
P&L Hardware, which was acquired by Cashbuild in 2016 for R350 million, saw its revenue declining by 5 percent during the quarter. The division has more than 60 corporate stores.
Cashbuild South Africa, with a 224 store network, contributes 79 percent to the group’s total sales in the quarter, while P&L Hardware contributes 12 percent to the group’s total sales.
Cashbuild, with operations in Malawi, Zambia and Botswana, has been experiencing a decline in earnings and in the year to end June, with profits declining by 7 percent to R432.42m, while earnings per share declined by 7 percent to 1 881.3 cents a share.
During the year, Cashbuild opened 11 new stores, consisting of nine Cashbuild stores and two P&L Hardware stores, and it refurbished 26 stores, relocated four Cashbuild stores and closed five Cashbuild stores, three P&L Hardware stores and six DIY stores.
The group’s intention has always been focused on increasing its portfolio by adding new stores and closing non-performing stores. It has also relocated and refurbished stores as it continues to look for more opportunities for growth.
Cashbuild's share price on Monday fell 0.61 percent to close on the JSE at R210.50.