Tough market conditions weigh on Cashbuild earnings

Cashbuild, South Africa's largest materials retail company, has reported a nine percent drop in headline earnings due to rising costs and subdued consumer spending. Despite facing difficult trading conditions, the company remains focused on expansion and investing for the future. In a recent interview with CNBC Africa, Werner de Jager, CEO of Cashbuild, discussed the company's growth strategy and outlook. One key theme that emerged from the interview was Cashbuild's commitment to opening new stores to tap into opportunities in the market. De Jager mentioned that the company added 25 new stores in the past year and plans to open at least 20 more each year. He emphasized that the cost of opening these stores is an investment for the future and that Cashbuild believes it will reap the benefits in the long run. Another significant point raised during the interview was the company's decision to close down certain stores that were not performing well. De Jager revealed that two stores reached the end of their leases and were shut down, along with two DIY stores that were part of a pilot program. The closures were part of Cashbuild's strategic realignment to focus on more profitable ventures and optimize its store network. When asked about the challenges the company is facing in the current market environment, De Jager acknowledged the tough conditions, particularly in regions like Hauting. However, he also highlighted the opportunities in other areas such as the Eastern Cape, where Cashbuild has been performing well. Looking ahead, De Jager outlined the company's expansion plans, which include opening new stores in Namibia, Lesotho, and Zambia. Despite the competitive landscape and potential saturation points, Cashbuild remains optimistic about its growth prospects and is focused on finding the right locations to establish its presence. In terms of future outlook, De Jager expressed caution about the upcoming elections and expected challenges in the near term. However, he remained confident about the long-term potential in the housing market, citing a backlog of over 2 million homes as a significant opportunity for Cashbuild. While the road ahead may be challenging, De Jager believes that Cashbuild is well-positioned to capitalize on the demand for home improvement products and services. Overall, Cashbuild's expansion strategy and focus on optimizing its store network reflect its commitment to long-term growth and sustainability. Despite the tough market conditions, the company's resilience and strategic approach indicate a positive outlook for the future.