SHIFT­ING FO­CUS

Finweek English Edition - - Companies & Markets Italtile -

THE PRES­SURE is build­ing at tile and san­i­tary­ware re­tailer Italtile now that the en­try-level mar­ket is start­ing to feel the ef­fects of the global eco­nomic credit crunch. That fol­lows the release last week of the group’s in­terim re­sults to end-De­cem­ber 2008, which showed a 2% drop in to­tal turnover to R1,4bn.

Like build­ing ma­te­ri­als re­tailer Cash­build, Italtile has fo­cused on a cash-pay­ing lower-to-mid­dle-in­come earn­ing mar­ket that’s pro­tected it against the ef­fects of high in­ter­est rates and strin­gent credit grant­ing poli­cies that have squeezed the mid­dle-to-higher in­come mar­ket.

How­ever, it won’t be able to es­cape the re­cent wave of re­trench­ments through­out many SA in­dus­tries, which could hurt a ma­jor por­tion of its tar­get cus­tomer base. As a re­sult, it says it’s not go­ing to main­tain the earn­ings level achieved in fi­nan­cial 2008 in its 2009 an­nual re­sults.

To help al­le­vi­ate that Italtile has shifted its fo­cus on lo­cally pro­duced tiles in its CTM stores and away from im­ports af­ter notic­ing its cus­tomers have shied away from more ex­pen­sive im­ported prod­ucts.

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