The building retail sector did not benefit from an increase in consumer spending arising from cuts in interest rates, lower inflation, and the Two-Pot pension payouts in the six months to December 29, said Cashbuild’s chief operating officer Shane Thoresson on Wednesday.
Cashbuild, one of southern Africa’s largest retailers of building materials and associated products that sells to a mostly cash-paying customer base through 318 stores, reported its financial results for the six months. The results saw the share price rise more than 3.3% to R182.49 on the JSE Wednesday morning, a price 25% higher than a year ago.
The tough trading conditions were reflected in single-digit sales growth over the six months, with revenue for the 309 stores opened prior to July 2023 up by 4% compared with the same period a year before, while 9 new stores contributed an additional 1% to revenue. Selling price inflation was 1.5% at the end of December 2024, compared to December 2023.
“Although interest rate cuts and reduced cost inflation are expected to provide much-needed relief to distressed consumers, we remain cautiously optimistic regarding the outlook for the remainder of 2025,” said Thoresson in an interview.
Headline earnings per share increased 4% to 573 cents. An interim dividend per share of 326 cents increased from 325 cents at the same time last year.
Group revenue for the seven weeks post the period-end, increased 6% over the same period last year. However, adverse weather had, subsequently, moderated sales, he said.
He said given “where we were in the last few years, 6% growth in turnover is okay. There are green shoots, and we have seen the number of customer transactions increase for the first time in a long time, which means there are more feet through the door,” he said.
On the other hand, the rainfall in Gauteng in January, according to estimates he had heard, was double that in the previous year the previous year, and builders usually don’t work with concrete, a major component of group revenue, in the rain.
Gross profit remained at similar levels while gross profit margin percentage decreased to 24.3% from 24.7% at December 2023.
During the period, 3 new stores were opened, 7 underperforming stores were closed, 14 refurbished, and 1 store was relocated. Thoresson said there was a good pipeline of potential store openings, and the group wished to achieve between 10 and 14 store openings a year.
He said that Cashbuild will, however, continue its store expansion, relocation, and refurbishment strategy in a controlled manner. The opening of the new Cashbuild Small Model Stores (SMS) remained on track.
Operating expenses fell 5% (existing stores decreased 6% and new stores contributed 1%). Operating expenses, excluding the prior period P&L Hardware goodwill and trademark impairment losses of R136.8m, increased by 5%.
Operating profit - excluding prior period P&L Hardware goodwill and trademark impairment losses - decreased by 7%.
Thoresson said the P&L store operations were “much better” although still lossmaking. If one stripped out closure and rationalisation costs, it was breakeven. He said they intended to convert some P&L stores into Cashbuild stores, and loss-making P&L stores would be closed.
Cash and its equivalents increased 20% to R1.91 billion. Stock levels, including new stores, decreased by 1% with stockholding at 88 days (June 2024: 90 days) at period end. Net asset value per share increased 2% to R79.11.
“We are pleased with the group’s performance for the period, considering certain challenges we continued to face,” he said.
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