“During the review period the ratio of household debt to disposable income continued to rise, serving to constrain consumer discretionary spend further in an economy which has recorded deteriorating growth over several years,” said [DATA ITE:Italtile].
“In the construction sector the renovations market was slightly more buoyant than the new-build market, which remained subdued in the context of negative sentiment and restrained public and private sector investment.”
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The home-finishing products retailer added that whilst the middle income market appeared less resilient than the top and bottom-end earners, consumers across the spectrum were price sensitive and acutely conscious of value-for-money offerings.
“The devaluation of the currency over the period had a significant impact on industry participants and trading behaviour, harming independent opportunistic traders and restricting access to the industry to new entrants,” the company said.
“Other consequences of this currency volatility and aggressive price competition were stock shortages and range gaps both in price and fashion, as operators attempted to cut costs further.”
Italtile, which comprises 115 CTM, Italtile Retail and TopT stores, also reported an increase in group turnover to 2.7 billion rand for the year ending 30 June 2014 from two billion rand for the same period in 2013.
Gross profit grew 31 per cent from 806 million rand in the 2013 year to one billion rand in 2014 while profit before taxation from continuing operations rose 22 per cent to 771 million rand from 631 million rand.
Earnings per share for continuing operations increased by 19 per cent in 2014, diluted headline earnings per share grew by 23 per cent and dividends per share, excluding the special cash dividend, increased by 19 per cent to 19 cents in 2014 from 16 cents in 2013.
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“Management anticipates that current trading conditions will persist for the foreseeable future. However, the group remains optimistic that there are sufficient opportunities to leverage in the business and the industry to enable it to continue to deliver a satisfactory performance,” Italtile said.
“In this regard, a clear strategy is in place for growing each of the three retail brands. In addition, improvements in the supply chain related to procurement and stock management will drive efficiencies and cost containment. Enhanced recruitment and training will be another key focus area.”