JSE-listed tile and bathroomware specialist Italtile has delivered consistent growth over the last decade, with its system-wide trading profit having grown from R361-million in the 2009 financial year, to R1.5-billion in the 2018 financial year and R1.79-billion in the financial year ended June 30.

The company on Thursday reported an almost R10-billion turnover for the financial year under review, with earnings a share of 102.6c, compared with revenue of R8.7-billion and earnings a share of 95c in the year ended June 30, 2018.

Italtile declared an ordinary dividend a share of 41c for the reporting year, compared with the 38c dividend paid in the prior financial year.

It will also pay shareholders a special dividend of 50c to celebrate its 50 years of existence, compared with the special dividend of 30c apiece paid in the prior financial year.

The company’s store network has reached 189 stores, comprising retail brands CTM, Italtile Retail and TopT. It also owns and operates five online webstores and tile and ceramics manufacturing facilities.

CEO Jan Potgieter on Thursday said most of the key performance metrics improved across the retail brands and integrated supply chain importers in the reporting period, but that the manufacturers had not fared as well.

In the first half of the reporting year, the company’s Ezee Tile manufacturing business underperformed on margins and profit. However, Italtile stated that upgrades to the plant in Mombasa, Kenya, and new production facilities under development in Lusaka, Zambia, and Harare, Zimbabwe, should help the business improve its performance and increase its market share.

Across the brands, retail excellence disciplines improved in the reporting year, which was reflected by better in-stock levels, enhanced store and merchandise presentation, technological innovation and better analytical reporting.

Potgieter explained that the company underwent a process to upgrade the store format across its three retail brands.

Italtile evaluates the look and feel of their stores every three years.

“As technology advances, we bring digital initiatives into our stores to effect an improved experience for our customers.”

Potgieter pointed out that CTM, in particular, took well to store format changes, calling these “Millennial stores”.

He said CTM had kept its signature warehouse characteristics, but has an improved shopping experience where large-format tiles were displayed more prominently, lighting had been improved and the bathroom shop had been designed to highlight the company’s bathware offerings other than tiles.

In the reporting year, Italtile also decided to introduce lighting merchandise to expand TopT's product basket, on the back of a gap in the lighting market for unique product offerings, said Potgieter.

He pointed out that "U-Light" would be trialed in five Gauteng-based standalone stores – in Bruma, North Riding, Southgate, Bryanston and Westgate – from the start of September.

The trial stores will test the scalability and viability of the U-Light offering as a standalone brand, offering unique lighting products.

“Looking at the lights industry from a retail point of view, we estimate the market size to be about R2.5-billion. We believe there is a gap in the market to offer unique and extended ranges of lighting solutions – different to the typical light solutions out there.”

Potgieter believes that, when commercial or residential renovations take place, for which tiles and bathroomware form the major part, lights are also a big factor involved.

He noted that, with the increasing focus on energy savings and a move towards light-emitting-diode lights, there should be big investments over many more years in that space, in which Italtile wants to participate.

Further, Italtile also in the reporting year introduced a mobile shop concept under its TopT brand called the Gig Rig. “As we are building the TopT brand, we have noticed that some markets are harder to penetrate, because we struggle to find optimal locations to set up stores.

“However, the mobile store is taken to some of the communities where we would like to build the TopT brand and test the market there in view of setting up a permanent store. Gig Rig has lifestyle displays, showing the tile ranges on offer, a TopT mascot for entertainment and engagement, music and prizes that are handed out,” Potgieter noted.

Meanwhile, he said there was little to indicate that meaningful economic growth was imminent and, therefore, Italtile expected discretionary spend to remain constrained in South Africa, while consumer- and investor confidence would continue to be negatively impacted on by unresolved sociopolitical and uncertainty issues.

Italtile plans on opening 15 stores in the 2020 financial year and will continue to build capacity in its supply chain.