Home improvement retailer Italtile is pivoting its focus to the growth-rich Kenyan market, with the group saying the East African economic powerhouse offers far more upside than its mature SA market.
Speaking to Business Day after the results announcement on Monday, CEO Lance Foxcroft confirmed that East Africa, particularly Kenya, which is the region’s biggest economy, is a key growth market for the group.
Foxcroft said the company sees potential not just in retail but also in complementary businesses such as adhesives and other building products, with the aim of creating an integrated business model similar to SA.
“We anticipate going into another node for us like SA, where we have a lot of particularly integrated businesses. Certainly, we’ll be looking for more growth out of East Africa than we would out of Southern Africa.”
According to Foxcroft, East African operations are benefiting from a combination of a lower starting base, improving social stability and urbanisation trends.
Consumers are moving to urban areas, property prices remain high and a growing middle class is emerging — all tailwinds for Italtile’s CTM offering. Foxcroft said the region has relatively few stores per population, leaving ample room for expansion.
In contrast, the Southern African markets continue to challenge the group. Weak GDP growth, trading down by price-conscious consumers and a slow building cycle have constrained margins, though interest rate cuts could provide some relief.
The retailer is also faced with import and regional tariffs, which have put further strain on local manufacturers. Foxcroft said global oversupply of soil products has led many countries including the US and India to impose tariffs to protect their local industries from cheap imports being dumped into their markets.
“We are positioning ourselves as the lowest-cost producer, making sure we have factories that can. But we’ve also approached suppliers we believe have been dumped into the country, and we’ll see how they respond,” Foxcroft said.
Italtile’s share price was more than 7% stronger on Monday afternoon, the highest since March, after the company declared a special dividend payout despite profit remaining flat for the year to end-June.
The group declared a final dividend of 22c per share, which resulted in a total dividend of 50c. A special dividend of 98c per share was added because of its strong cash generation and cash reserves in excess of operational requirements.
For the year headline earnings per share (HEPS) rose 2% to 125.1c as system-wide turnover dipped 2% amid a weaker performance at its manufacturing and supply chain unit.
The retail segment, however, edged up 1%, with customers still drawn to the group’s brands even as many bought smaller baskets, it said. Online stores and the East African operations also stood out as bright spots.
Foxcroft said shoppers were “searching out value” but remained loyal.
“Our focus on an exceptional customer experience across many touch points has ensured volume growth on retail sales and increased retail market share despite challenging trading conditions.
“Customers remain loyal to our trusted brands, searching out value of big savings, reliable quality, leading fashion and customer service when choosing where to spend their hard-earned savings,” he said.
“Our resilient, skilled and motivated teams remain our competitive advantage and ensure we are well placed to convert opportunities when the building sector recovers and trading conditions improve.”
Trading profit remained steady at R2.1bn after the company cut costs, ending the year with cash of R2.2bn — an increase of 18%.
The group warned that weak economic growth, cheap imports and tariffs in neighbouring markets would keep pressure on margins. It planned to intensify cost control and efficiency while reviewing noncore assets, it said.
By market close, Italtile’s share price had gained the most since February 2023, up 6.06% to R11.03.
Correction: August 25 2025
This story has been corrected to show the special dividend declared was 98c per share, not 90c as previously reported.
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