Italtile, the tile and bathware retailer, manufacturer and importer’s headline earnings per share were expected to decline between 11% and 16% in the year to June 30 due to rising costs and subdued consumer demand.
The group said in a trading statement yesterday headline earnings per share were expected to be between 127.8 cents and 135.3c for the year, compared with 152.1c at the same time last year.
“Basic living costs and interest rates continued to rise… putting further pressure on homeowners experiencing low wage inflation and high levels of unemployment,” the group said.
In addition, currency depreciation and inflation-driven input cost increases drove up product and building costs, reducing consumer affordability in the new build and renovation markets.
Consumer and investment sentiment also declined in the context of socio-political instability and country-specific risks.
“These unfavourable trading conditions resulted in a decline in foot traffic and transaction numbers across the industry,” the group said.
Competition had also intensified, with local and offshore operators expanding their footprint, capacity and offerings. The reopening of the global economy and soft international demand had resulted in increased competitiveness of imported products.
The group, however, made strong progress in updating manufacturing technology capabilities and enhancing customer experience in stores.
Retail brands, Italtile Retail, CTM, TopT and U-Light, saw net sales decline despite 6.7% price inflation. Like-for-like retail store turnover decreased 0.3%.
In the integrated supply chain, manufacturing businesses Ceramic Industries and Ezee Tile’s combined sales value grew 4.1%, although sales volumes declined.
“These businesses thrive at full capacity and subdued demand, together with increases in input costs, adversely impacted on profitability,” the group said.
The integrated supply chain import businesses, Cedar Point, International Tap Distributors and Distribution Centre, reported a 4% decline in sales.
Gross margin was further negatively impacted by lower volumes as a result of subdued demand, manufacturing inefficiencies, load shedding, input cost inflation and increased competition. The consolidated gross margin reduced by 2.4%.
BUSINESS REPORT