Few industries benefited from the Covid lockdowns that turned daily life upside down.
The building materials sector was one of the exceptions. With people stuck inside with time to spare, many took on do-it-yourself (DIY) projects to spruce up their homes and learn new skills. For retailers such as Cashbuild and Italtile, lockdown shifted from being a burden to a boon, as demand for their products surged among consumers.
Cashbuild’s top line fattened, its cash position improved and profits were perky. A few years later, after the pandemic ended and public life returned, the situation is markedly different.
Cashbuild CEO Werner de Jager confirmed that the boom has ended as consumers are no longer enthusiastically embarking on DIY projects. He doubts revenue growth will return to double-digit territory — the kind seen during Cashbuild’s 2021 financial year when the company experienced 25% growth, which De Jager described as “fantastic”.
“Over the past year or two, we have seen a sales slowdown. This decline has also been reflected in the average basket size, which has come down slightly. It’s an indication people are not buying as much,” he told IM.
Cashbuild’s revenue growth has moderated significantly from its 2021 highs. For the year ended June 2025, it reported a modest 5% increase on a 52-week adjusted basis (the prior period included an extra week). This trend of challenging trading conditions has persisted beyond the reporting period. Though revenue for the seven weeks after year-end was 6% higher than the previous year, De Jager urged caution, saying: “It’s still early days ... seven weeks out of 52 is not anything to hang on yet.”
Though Cashbuild had a 4% increase in transaction volumes, customers spent less per trip in terms of value
The market seems to have taken stock of the challenges, as Cashbuild’s shares are down more than 30% this year. Italtile is in a similar boat, down 29%. So, what has changed for Cashbuild and its competitors?
Retailers typically rely on consumers’ discretionary spending for success. Cashbuild and other building materials retailers face a unique challenge: they depend not only on consumers having money but also on their willingness to spend it specifically on home improvements. Though Cashbuild had a 4% increase in transaction volumes, customers spent less per trip in terms of value.
De Jager says professional builders, not DIY customers, are driving larger purchases. Cement remains a cornerstone of sales, accounting for nearly 25% of total volumes. Strategic aggressive pricing on cement helped grow volumes by about 5% in the past year, outperforming broader market declines where volumes fell between 5% and 7%. Smaller-scale decorative products such as floor tiles have also shown notable growth, driven by consumers undertaking projects with smaller budgets.
In this tough environment, De Jager says the focus will be to drive growth by increasing product volume and transaction numbers rather than relying on price hikes. There is limited scope for raising product prices as consumers remain price-sensitive, which is reflected in the modest selling price inflation rate of 1.7% at the end of June 2025.
De Jager says the company balances competitive pricing with protecting gross margins and does not engage in loss-leading or irresponsible discounting. The strategy includes aggressive pricing on cement (this product experienced low inflation of 0.3%) to maintain market leadership while offering customers value, supported by ongoing efforts to contain operating costs.
Another threat to Cashbuild is the influx of inferior products disrupting the market. De Jager points to low-grade items including chrome pipes, corrugated iron that typically rusts within a year, and window panes made from glass thinner than the 3mm minimum required by the South African Bureau of Standards.
“These products are imported and sold by independent and informal retailers. They are neither fit for purpose nor of good quality,” he says.
In response, Cashbuild is increasing its investment in customer education within stores to warn buyers about the risks associated with low-grade products.
Optimising store expansions and refurbishments is another pillar of its growth strategy. Cashbuild opened eight new stores (seven Cashbuild and one P&L Hardware) and closed 12 (one Cashbuild and 11 P&L Hardware) underperforming stores this year. It refurbished 26 Cashbuild stores and relocated one P&L Hardware store. The group plans to continue its expansion, relocation and refurbishment strategy in a controlled manner.
“We want to roll out new stores because there are still areas where Cashbuild is not well represented, such as the Western Cape. We managed to open eight new stores this year, but that is not enough. We want to open more this year, though finding suitable sites is proving difficult,” says De Jager.
Cashbuild is now leaning on its small-model store format for growth. The more flexible layout allows the company to expand into buildings not suited for its traditional box model.
Cashbuild is set to grow its store footprint and gain exposure to higher-income consumers once South African competition authorities approve its plan to acquire 60% of Allbuildco Holdings for R93m — a deal initially announced in April. De Jager also hinted at other potential deals and opportunities. Funding future acquisitions may be straightforward, as Cashbuild has R509m in immediate cash available.
Ray Mahlaka
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