JSE-listed ceramic tile and bathroom accessories retailer Italtile expects to report a marginal decline in turnover for the financial year ended June 30.

In a trading update to shareholders on August 11, it said revenue was still satisfactory, given the very high comparable base of the preceding financial year, which was underpinned by pandemic-related stay-at-home restrictions.

The group is currently finalising its financial results, which it plans to publish on August 25.

Earnings per share (EPS) for the year under review are expected to be between 150.6c and 153.6c – a 7% to 9.2% increase on the EPS of 140.7c reported for the prior financial year.

Headline earnings per share (HEPS) are expected to be between 150.6c and 153.7c – a 7.5% to 9.7% increase on the HEPS of 140.1c reported for the 2021 financial year.

The retailer attributes the increase in EPS and HEPS to modest profit growth, complemented by the exceptional items, including a decrease in the non-controlling interest percentage in Ceramic and Ezee Tile, following the vesting of Ceramic retention shares and the purchase of founder Mike du Plessis’ 26% shareholding in Ezee Tile following his retirement on June 30, 2021.

Exceptional items also included a decrease in the weighted average number of shares used in the EPS and HEPS calculation, given the timing of share repurchases in the prior period, Italtile points out.

Challenging trading conditions persisted from February and included significant increases in inflation, which drove up input and other operating costs and, specifically, placed pressure on manufacturing margins.

Further, the shift in consumer spending away from home improvement to other recreational and discretionary purchases was a challenge, as was lower customer footfall and a decline in demand was widespread across the industry.

Additionally, the global supply chain disruptions caused instability in supply and pricing for most of the year under review, although these eased towards the end of the review period. There was also intensified competition in the local market.

Further, consumer confidence declined amid widespread despondency regarding deteriorating social and economic conditions, while interest rates and inflationary pressure on building costs increased, which subdued investment sentiment and influenced cost-conscious homeowners to defer or scale down on renovation and building projects as affordability was impacted.

The disruption and higher costs caused by increased load-shedding, despite mitigation measures implemented, continued to negatively impact on operations and profitability, the company adds.

"In the context of this operating environment, our strategic focus remained on the growth levers within our control and influence, namely constant innovation and investment in delivering an unsurpassed shopping experience for our customers, sales growth, productivity, cost leadership and partnerships with our people.

"The solid results reported for the review period are attributable to our robust business model, including our strategically integrated supply chain, which alleviated supply and pricing volatility; our steadfast strategies and resilient team," Italtile highlights.

Meanwhile, Italtile's retail store turnover reported by its CTM, Italtile Retail, TopT and U-Light brands improved by 2.8% compared with the prior period. Like-for-like retail store turnover, excluding sales of stores opened and closed during the period, grew by 1.2%.

The combined manufacturing sales reported by Ceramic Industries and Ezee Tile Adhesive Manufacturers increased by 1.8%.

However, the manufacturing division’s results for the review period are not comparable with the prior period owing to the resumption of phased closure of all of Ceramic’s factories over December 2021 and January 2022 for routine maintenance.

Further, the company's manufacturing division results are also not comparable to the preceding year's results owing to Ceramic’s Samca floor tile factory, which relaunched as Samca+, was closed for five months spanning the prior and current year, while undergoing a major upgrade, and the fact that substantially more load-shedding was experienced, it notes.

Additionally, the company's Integrated supply chain importers, comprising Cedar Point, International Tap Distributors and Distribution Centre, reported a 2.4% decline in sales compared with the prior period, primarily owing to unavailability of products during some periods, and weaker consumer demand, as inflation reduced consumers’ disposable income and affected affordability.