Building materials retailer Cashbuild’s share price slumped on Tuesday after it reported that revenue for the December quarter had fallen 11%.
The Johannesburg-based group, with operations also in Botswana, Malawi and Zambia, was hit by the widespread looting in July last year leaving some of its stores in KwaZulu-Natal and Gauteng damaged and shut down, affecting sales.
The company has since reopened 29 of the 36 stores, including three P&L Hardware stores, which it bought in 2016, bringing the total number of shops at the end of the second quarter to 317.
It said revenue for the second quarter for the Cashbuild Group was down 11% on the comparative period. But even excluding the looted stores, revenue was still down comparative to the second quarter of the previous year.
“Excluding the results of the 36 looted stores, revenue for the second quarter for the group was down 5% on the second quarter of the prior financial year,” the company said.
Adding that revenue for the 305 stores in existence before July 2020 fell 13% while the 12 new stores contributed 2%.
Chronux research analyst Rowan Goeller said there were no surprises in the operational update as management had flagged revenue declines in its previous reporting while data showed that consumers had come down from the DIY pink cloud that erupted post the 2020 lockdowns.
“When people came out of the lockdowns in 2020, there was a massive DIY-boom and that creates quite a high base, so they are coming off that high base which ought to be expected as we have seen in other construction material sectors,” Goeller said.
Cashbuild’s share price fell 3.77% to trade at R259.86 after its Sens announcement. This follows a 5.07% drop in the previous 30 days.
The group, with a market capitalisation of R6.7bn on the JSE, said walk-in customers declined 18% in the three months to December.
The core Cashbuild business in SA remains the engine of the group, comprising 80% of the group’s total sales.
In its second quarter results, Cashbuild’s operations in the Southern African Development Community countries outside SA, which contributed about 7% of total sales, rose 3% in the period.
“They did not see the boost to revenues in those territories as they did not experience the DIY boom that we saw in SA,” said Goeller.
The retailer set a string of records in its 2021 year ending June, when revenue rose 25% to R12.6bn and profit jumped almost 150%, benefiting from demand for home improvement during the Covid-19 pandemic as people spent more time at home.
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