Cashbuild Opens More Stores But Expects Delayed Recovery
May 04 2010
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Building materials retailer Cashbuild expected to wait a year for a significant improvement in trading conditions, CEO Pat Goldrick said at the end of April, as the home improvement market struggles to shake off the effects of the economic downturn.

"If you're going to renovate your home you have to have money, and disposable income has been squeezed," he told Business Day. "We're now beginning to see the true bite of what's happened in SA."

Goldrick was waiting to see a marked increase in the number of building plans approved, which he expected to happen in about December, as confidence recovered.

"There's typically a lag there of three to six months, so the real turnaround would happen around Easter."

The Soccer World Cup would provide a temporary boost to Cashbuild, as workers took leave and used that time to improve their homes, but that would not be sustained.

Goldrick was more optimistic about the building of new homes by the state, which he expected to pick up in earnest after the World Cup.

"The government will be focusing on following through on their promises on new homes, and we'll be in the right areas.

"We're the country's largest distributor of timber and cement, so one way or another we benefit."

Cashbuild's operational update for the three months to March, published yesterday, showed a 4% rise in revenue from the same period last year.

Stores opened since July 2008 contributed three-quarters of that increase, which means Cashbuild's revenue for the financial year so far is up 7% on the first three quarters of last year.Despite the sector's sluggish recovery, the company would press ahead with its strategy of opening new stores in large rural communities, which house the majority of its 187 stores.

"We'll open another three between now and Christmas, which will give us about 10 for the year."

This compares with a typical rate of 10 to 15 new stores a year, indicating that the downturn has not precipitated a change in strategy on that front.

But expansion plans had been hampered by electricity shortages in the past two years, as well as a slowdown by property developers after the recession took hold.

"We identified some years ago which towns or areas would want a building materials store," Goldrick said. "But it takes a while - we have to get the right price."

Cashbuild would continue to concentrate on opening stores in communities with at least 20 000 households.

Adapted from Source: Business Day, 29 April 2010