Top-end tile sales take a hit

Italtile Limited, the JSE-listed ceramic tile and sanitaryware retailer and manufacturer, warned of “substantially lower” sales within its upmarket Italtile retail chain.

The group’s financial year is to the end of June and the trading update yesterday highlights the impact of Covid-19. However, buried down in the second page of the update is the worrying warning.

“Italtile Retail’s sales were substantially lower than the prior comparable period,” it said.

“This is due to a combination of factors, including the continued deterioration of the commercial projects market in the premium-end segment and the general decline in size of the top-end residential market in the wake of private investor capital exiting SA.”

Interestingly, the group – which also owns mid-market and discount sanitaryware chains CTM and TopT – did not highlight the impact of Covid-19 first in relation to lower sales within its premium Italtile chain. “The inability of contractors to operate during the lockdown further restricted sales in the high-end home renovations segment.”

Italtile’s comments around private investor capital exiting the country come as several economists and business organisations, such as the SA Property Owners Association, have warned about capital flight, even before the Covid-19 pandemic struck.

Meanwhile, Italtile also warned that headline earnings per share for its year-end to June, will be between 18% and 28% lower. The forecast includes a onceoff cost of R39 million related to its black empowerment deal with Yard Investment Holdings.

The overall decline in group earnings is largely related to the lockdown restrictions to trade. However, it noted that with the easing of the lockdown, sales were picking up, particularly within its CTM and TopT divisions.

“The group’s results for the second six months of the current financial year, being 1 January to 30 June, are best analysed in the context of the progression of the pandemic in our trading markets.

“In the pre-Covid-19 era, up to 27 March when the lockdown was implemented, sales were on track, with management’s stated target to deliver growth in line with the first six months of the current financial year, 1 July, 2019 to 31 December, 2019,” it said.