Cashbuild lifts revenue 6%

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Cashbuild (CSB) recently announced a 6% rise in revenue in the third quarter of its 2014 financial year despite a difficult trading period in that quarter. Cashbuild (CSB) recently announced a 6% rise in revenue in the third quarter of its 2014 financial year despite a difficult trading period in that quarter.

Cashbuild (CSB) recently announced a 6% rise in revenue in the third quarter of its 2014 financial year despite a difficult trading period in that quarter.

Growth in the lower-end segment of the building material and hardware space has been hindered by the reduction of unsecured lending‚ strikes‚ and rising debt and utility costs‚ which have hampered consumer spending.

"Stores opened since July 1 2012 contributed 6% of the increase‚ while [the] existing 191 stores remained at similar levels‚" the building wares retailer said.

Nine of the 19 new stores opened are in proximity to existing Cashbuild stores‚ causing an overlap of trading area with a resultant effect on existing stores' sales growth and customer transactions. Third-quarter growth together with first-half growth equates to an increase in revenue year to date of 7%.

Third-quarter transactions at the till increased 2% compared to the third quarter of the prior financial year. New stores contributed an increase of 4%‚ and existing stores decreased 2%. Total units sold in the third quarter remained at levels similar to the prior year‚ with existing stores decreasing 3%.

Cashbuild typically serves home builders and improvers in the lower living standards measure segment‚ and contractors and public sector infrastructure developers.

Three new stores were opened during the quarter‚ bringing the number of stores trading at the end of the third quarter to 210.

The company said two stores were refurbished and one was relocated during this quarter.

"Selling inflation was at 5% at the end of March when compared to March last year. Gross profit percentage margins remain strong at similar levels to those reported at the half-year‚" Cashbuild said.

Earlier this year‚ the group said it remained cautious about top-line trading prospects for the remainder of the financial year. In the six months ended December‚ it reported an 8% decline in first-half headline earnings per share to 600.1c‚ weighed by expenses.

Selling and marketing expenses rose 8% to R527m‚ while administrative expenses grew 32% to R101m.

At the higher end of the building material and renovations market‚ sales have held up relatively well.

Sales at Massmart's Massbuild‚ which trades under the Builders Warehouse‚ Builders Express and Builders Trade Depot brands‚ rose 11.9% for the full year. Meanwhile‚ Italtile is also faring well.

The group forecast that headline earnings per share would be 15% to 17% higher for the six months to December 2013.


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