Cashbuild has released an update for the third quarter of the 2022 financial year. The market is keeping a close eye on the company, as sales have dipped vs. a strong base and Cashbuild has struggled to build momentum after the riots in mid-2021.
In the latest quarter, revenue fell 10%. Existing stores fell 11% and new stores contributed 1% growth. When combined with the prior two quarters (i.e. reflecting the first nine months of the current financial year), revenue is down 11%.
There were 305 stores in existence prior to July 2020 and the riots affected 36 stores, so their impact was substantial. Excluding this impact, revenue for the latest quarter was down 7% on the comparable period, so there has been a normalisation of demand for building supplies by South Africans. The year-to-date decrease is 5% excluding looted stores, so the latest quarter reflects a tougher base effect than in previous quarters.
Transaction volumes were down 17% this quarter and existing store volumes fell 19%. This means that price inflation was 8.1% (the difference between existing store volumes and existing store sales, with a small rounding difference). New stores contributed 2% volume growth.
The P&L Hardware business (8% of group sales and 17% of the store footprint) experienced a much better third quarter relative to the first half of the year, although sales still fell 14%. Aggressive pricing in this business helped drive revenue.
In the third quarter, the group opened two new Cashbuild stores, refurbished five Cashbuild stores, relocated one Cashbuild store and closed four stores – three looted Cashbuilds and one P&L Hardware. There are 312 stores currently trading and 5 looted stores being rebuilt for reopening.
The Cashbuild share price is up 9.6% this year and is down 9.4% in the past twelve months. I bought at around R246 per share, so I am currently around 15% in the green.
Disclaimer: the author holds shares in Cashbuild
