Cashbuild, southern Africa’s leading hardware retailer, on Friday reported a 5% increase in sales for the first six weeks of its 2025 financial year, showing resilience despite challenging market conditions.
CEO Werner de Jager wrote in their annual report that Cashbuild’s sales had increased 5% for the first six weeks of their new financial year to end June 2025, an indication of the improved market sentiment.
“We are more optimistic about the outlook for the next business year as we are hoping that the Government of National Unity, and to a lesser extent the Two-Pot system, will stimulate economic growth and that the much-needed infrastructure programme will find traction during the 2025 calendar year,” he said in the report that was released on Friday.
Many companies have reported an improvement in consumer confidence in South Africa since the formation of the Government of National Unity, since inflation has moderated and after the recent small cut in interest rates, but there had been little indication yet that this optimism has translated into significantly higher consumer spending.
Cashbuild, which operates 322 hardware stores across six countries in southern Africa, had faced another tough year in the 52 weeks to June 2024 due to customers’ disposable income remaining under pressure, but there were already some positive signs in the fourth quarter, and together with an additional trading week, contributed to an increase in the revenue line, he said.
For the 52-week period to end-June 2024, revenue had increased 5% to R11.2 billion. However, headline earnings a share fell by 22% to 947 cents.
Operating profit, excluding the impairment of the P&L Hardware goodwill and trademark, decreased 16% to R325 million.
During the year, five new Cashbuild and one P&L store was opened, two Cashbuild stores were closed, and one was relocated. The company hopes to open at least 10 new SMS Cashbuild stores in the new financial year.
Store locations are selected on the basis of in-depth feasibility studies and extensive stakeholder engagements.
The company has an African expansion strategy but the cost of opening a store across the border “remains extremely onerous and time consuming”. The company operates 29 stores outside South Africa.
The Old Mutual 2024 Savings and Investment Monitor survey showed that the proportion of South Africans reporting high or overwhelming levels of financial stress declined to 37% in 2024 from 46% in 2023 and 58% in 2020.
Moreover, 68% of employed South Africans are optimistic their financial situation will improve in the next six months, a significant improvement from the 58% level in 2020.
Over the past year, Cashbuild’s net asset value decreased by 5% to R76.67, mainly due to share buybacks. The share price was 0.2% higher at R181.45 on Friday on the JSE, up 8.7% year-to-date. The higher share price relative to net asset value indicates the market rates to company highly.
In the report, the company lists as a material consideration that the home improvement trend has been declining since the lockdown restrictions were lifted, but with the deterioration of the South African infrastructure, the building retail sector is expected to pick up “as communities start fixing their own infrastructure, i.e., roads”.
The total number of employees fell 9.6% to 5 472 from 6 046, while the annual revenue per employee went up 16.1% to R2.05m.
BUSINESS REPORT