Cashbuild is a ‘what might have been’ story

You have to feel for South African discretionary retailers. If it’s not load-shedding, riots, infrastructure issues or structurally high interest rates that are causing pain, then it’s a global geopolitical environment that has led to a spike in oil prices. Just as one problem gets banished to the history books, another emerges.

Cashbuild is trading at the same levels seen in the early part of 2024, which means opportunistic short-term punters’ investments have gone nowhere. But this is a good example of why dividend-paying stocks still matter: even if the share price does little, there’s a dividend that pays you to wait.

With the benefit of hindsight, the correct trade for investors would’ve been to sell into the strength towards the end of 2024, when Cashbuild’s cup was overflowing with GNU optimism. Investors who held on with a long-term view watched that excitement wash away in 2025. Sigh.

At the time of writing, the year-to-date decline of 5.7% is annoying in the context of growth in a top 40 ETF of 1.3% over the same period. But the performance of the top 40 index is being driven by factors that are far removed from the realities facing South African consumer businesses, so this is hardly a fair comparison. Sector peer Italtile is down 10% year to date, so things could be worse.

Cashbuild’s year-to-date decline is hiding the real volatility in the stock. If you look at the share price chart over the past few months, it is behaving like a Jack Russell on heat. Having traded at almost R160 earlier this year, the share is now at around R127. Being down roughly 20% from recent highs shows that Cashbuild has already taken some serious punishment as the market works through the implications of higher energy prices, pressure on consumer spending and the reduced likelihood of further interest rate cuts.

Frustratingly (or perhaps luckily?), things were looking much better for Cashbuild in the months leading up to the conflict in Iran. The operational update for the three months to March 2026 (the third quarter of the financial year) included encouraging elements.

The fragility of South African consumers makes Cashbuild sensitive to any economic shocks

One such element was growth in group revenue of 9%. That’s especially impressive in the context of selling-price inflation of just 0.6% as at the end of March, as it means volumes were the primary driver of growth. Of course, that period doesn’t reflect the horrors of a high petrol price, so we are now in a new world that will only be included in the next quarterly update.

Cashbuild is a “what might have been” story that the market is waiting for more information on. In the meantime, we can consider the recent sales growth and whether Cashbuild is at least entering a tough period in a position of strength.

Cashbuild splits its growth into “existing stores” and “new stores” — but you have to be careful here. “New” doesn’t mean a store that was opened this quarter. At Cashbuild, it means stores opened since July 2024. That’s nearly two years ago! This approach isn’t uncommon in retailers, as stores typically move into the “like-for-like” growth category only once they mature. The use of the word “existing” just makes it more confusing for investors. In case you’re wondering, there are 301 existing stores and 16 new ones.

New stores achieved growth of 5%, accounting for more than half of total growth. A major underlying driver is the acquisition of Amper Alles hardware stores, finalised in December 2025. They are reported as part of the “all other segments” bucket, which now contributes 9% of Cashbuild’s revenue (7% previously). The other thing you’ll find in there is the problematic P&L Hardware business, which suffered terrible pressure on sales in the first half of the year before what appears to be some improvement in the third quarter.

The star of the show in existing growth is Cashbuild South Africa, which contributes 82% of group revenue. Growth of 7% in the third quarter is a significant acceleration from 2% in the first six months of the year.

The fragility of South African consumers makes Cashbuild sensitive to any economic shocks. And with an earnings multiple of 11.1, it doesn’t look like the market is pricing this in. It might be prudent to retain Cashbuild shares as a long-term play on South African growth, although IM can’t recommend buying more shares right now. Cashbuild is a good example of the pain felt when bad macro happens to good people.