JSE-listed Italtile expects to report earnings per share (EPS) and headline earnings per share (HEPS) of 71.8c to 82.1c, and 73.3c to 83.5c, respectively, for the financial year to end June 30.

EPS and HEPS will be lower than that reported for the prior financial year, in part owing to a one-off R39-billion charge related to the broad-based black economic empowerment transaction concluded with Yard Investment Holdings.

Italtile on June 17 provided an update on the group’s performance over the 48 weeks to May 31.

In the pre-Covid-19 era, up to March 27 when the national lockdown was implemented, Italtile's sales had been on track with management’s stated target to deliver growth in line with the first six months of the financial year from July 1, 2019, to December 31, 2019.

However, subsequent to the commencement of the lockdown, sales across the manufacturing, supply chain and retail operations were severely impacted.

Total retail store sales for the 48 weeks ended May 31 decreased by 5%, while like-for-like retail store turnover declined by 10% compared to the prior corresponding period.

Manufacturing sales for the 48 weeks were 10% lower when compared to the prior comparable period.

In terms of individual brand performance, Italtile Retail’s sales were substantially lower than the prior comparable period. This is owing to a combination of factors, including the continued deterioration of the commercial projects market in the premium-end segment and the general decline in the size of the top-end residential market in the wake of private investor capital exiting the country.

The inability of contractors to operate during the lockdown further restricted sales in the high-end home renovations segment.

Prior to the lockdown period, CTM’s sales were solid and in line with the performance reported in the year ended June 30, 2019.

However, sales during Level 5 of the lockdown were minimal.

The subsequent easing of restrictions in Level 4 resulted in an increase in turnover compared with the prior year, with a clear disparity between rural-based stores which traded robustly, and suburban stores where sales were more obviously impacted by cautious consumer behaviour in light of the pandemic and sustained limited disposable income.

TopT reported a "surprisingly strong" performance in the second half of the current financial year, notwithstanding restricted trading in line with regulations, stated Italtile. This was underpinned by improved operational disciplines in the business, as well as higher spend in certain regions where homeowners returned to their rural homes to wait out the lockdown.

Consumers in this segment typically continue to invest incrementally in their homes as funds become available, and with the full reopening of stores in May, brisk sales resumed with double-digit growth achieved, Italtile pointed out.

For the most part, post-lockdown, the franchise network across the brands is healthy and stable.

The group highlighted that its well-established online sales and delivery platform recorded a pleasing performance over the period pre-lockdown, and with restrictions placed on consumers shopping in-store during the lockdown, this channel benefitted from growing traffic and increased quotes and sales.

This trend is likely to become entrenched, aligned with consumer behaviour which adapted and changed owing to restrictions imposed by lockdown regulations and will likely become a permanent feature, the group posited.

The group’s robust cash reserves and engrained disciplines of working capital management and cost leadership have been a significant advantage for the business, specifically since lockdown, it noted. 

Additionally, with the onset of the pandemic and trading restrictions, management implemented immediate and urgent measures to further optimise cash flow and preserve cash.

These measures included further cost savings across the operations; temporary deferral of operational and capital expenditure and headcount costs; and salary and fee sacrifices by executive and nonexecutive directors, as well as management at various levels.

Management continues to aggressively review the group’s cost base and remains cautiously optimistic regarding improved trading and continued solid cash flows going forward, it said.

Italtile will publish its full-year results on August 25.