The group yesterday released its results for the six months to the end of December.
“Despite a 9percent growth in the number of stores, the severe economic pressures experienced by the man in the street were noticeable in the marginal increase in Cashbuild’s number of customer transactions period-on-period. During the first half, Cashbuild added 22 new stores and four Cashbuild stores were relocated,” Cashbuild chief executive Werner de Jager said.
Group revenue for the period increased by 5percent from R5.2billion to R5.4bn. Operating expenses, including new stores, were up 9percent. Operating profit decreased by 10percent to R325million. The operating profit margin, which indicates how efficient a company is at controlling costs, was 6percent, compared with 7percent in December 2016.
Basic earnings per share and headline earnings per share decreased by 8percent, while net asset value per share increased by 15percent to R73.03.
The company declared an interim dividend of 496cents.
Cashbuild operations director Shane Thoresson said yesterday the group would maintain its growth aspirations.
The company sells to a cash-paying customer base through 317 stores.
“We will continue to refurbish existing stores. We have a good business model. We are not losing market share. We just need to stick to basics,” said Thoresson.
In the six months, Cashbuild opened 22 new stores, refurbished 10 stores, and four Cashbuild stores were relocated.
“Cashbuild will continue its store expansion, relocation and refurbishment strategy in a controlled manner, applying the same rigorous process as in the past,” the company said.
Thoresson said that, given the competitive environment and constrained consumer spending, the company had to keep its costs down.
The release of the results yesterday triggered a fall in the company’s shares on the JSE, which closed 3.96percent down at R461.
Analyst Ian Cruickshanks said yesterday the fall was expected given the results.
“In the final analysis, headline earnings per share were down. What do shareholders invest for? Shareholders have every reason to be concerned about that,” said Cruickshanks.
He also pointed out that the company’s operating profit decreased by 10percent because of the 9percent increase in operating expenses. He said the increase in operating expenses - which include the new stores - should concern Cashbuild.
“One of the few positive things about these results is that they have cash in the bank,” he said, referring to the R1bn cash balance. “But for me, Cashbuild is a no-go area at the moment,” he said.
- BUSINESS REPORT