Results in brief:
Revenue up from R59m to R103m up by 73.5%
Organic growth of 30.5%
PBT up 66.3%
Headline earnings per share up from 5.3 cents to 9.7 cents per share, an 82.8% increase
Says Shaun Miller, Hardware Warehouse's CEO, “Our strong growth in revenue is a result of steady organic and new store growth, contributing 30% and 38% respectively, with supply to Government adding another 5%. We have effectively utilised some of the funds raised from listing to acquire the Mtubatuba store, which has met with our expectations and is now one of our top performing stores. This gives a good base for rapid expansion into KwaZulu-Natal and Swaziland. The majority of the funds have supported our new branch roll-out strategy and increased stock levels where required”.
The financial year started with 11 stores, and grew to 14 as three new stores started trading during the past six months. These were the store at Mtubatuba, which is the first store in KwaZulu-Natal, and a further two stores in the Eastern Cape. An additional retail concept, branded “Bath and Tile Warehouse”, and specialising in baths, sanitary ware, and flooring products (including ceramic tiles), was also added onto an existing store as a concept store for potential expansion of stand-alone stores.
During the year, 11 of the stores were completely rebranded and the balance will be completed before the end of the year. Overheads were well controlled during the same period. Given the sales performance, management took a strategic decision to invest rebranding of the stores, as well as on an extensive advertising campaign. According to the company, customers, staff and suppliers have welcomed the rebranding and this is evident in the company's results.
“One of our key focus areas for 2008 is tendering for Government projects. We have established a new division to supply the government housing departments and large contractors, with a turnkey solution to assist in rolling out housing delivery. A new contract for materials for 300 houses has been awarded to us by provincial government and a tender for materials for a further 330 houses has been won through our alliance with the large contractors” added Miller.
The business operations have not been adversely affected by the current electricity crisis. All stores are able to continue using generators to power computers and all essential items to ensure minimum loss in revenue.
Despite the general slowdown in sales currently experienced in the retail sector, the company is still in line to meet the forecast for the full financial year as per the prospectus. This is largely due to the niche market in which HWWH operates where the effects of the interest rate and power outages have minimal effect.
