HARDWARE WAREHOUSE ANNOUNCES ENCOURAGING INTERIM RESULTS
DESPITE ECONOMIC DECLINE
18 March 2009: Alt-X listed Hardware Warehouse Limited (“HWWH” or “the company”) today
announced its interim results for the six months ended 31 December 2008. “Not only are we are
pleased to have exceeded our aggressive management forecasts for the December 2008 interim
period, but we have proudly exceeded expectations in all three consecutive six month reporting
periods since listing. This despite arguably the most challenging economic conditions in our
history,” says Shaun Miller, CEO of HWWH.
For the six months to December 2008 revenue rose by 61.12% to R165.7 million from R102.8 million for
the same period in the previous year. Positive organic growth added 34.90% to revenue whilst 26.22%
was attributable to new store openings. Headline earnings were up 35.48% to R8.1 million with headline
earnings per share growing by 17.85% to 11.42 cents per share.
These interim results are especially encouraging in light of the highly negative conditions experienced
throughout the retail sector during the reporting period. Escalating interest and inflation rates, coupled
with high fuel and electricity costs, have affected the disposable income of the company’s customer
base. For this reason Hardware Warehouse will continue to pursue building materials price reductions
for the benefit of all its customers. The company’s stringently controlled cost structures, in addition to its
constant improvements in product range and operational efficiencies have assisted it in achieving these
“Our business model remains simple and effective, which bodes well for ensuring sustainable
long term growth. In line with our desire for a national presence and to expand our reach in key
provinces, we will make our first operational investment in Mpumalanga, by opening a new store
in Nelspruit in the next few weeks,” continues Miller. He acknowledges that current market conditions
are not conducive to capital raising exercises thus funding will continue to be achieved by means of
Over an 18 month period to December 2008 an 82% store growth was attained, with the company now
having a total of twenty stores under the expanded Hardware Warehouse, Bath and Tile Warehouse
and On-Tap brand banners. To supplement Hardware Warehouse’s existing presence in the Eastern
Cape and Kwa-Zulu Natal regions, the company continues to look for value-add acquisitive
opportunities within key identified provinces. Further expansion plans are in the pipeline for both
Mpumalanga and Kwa-Zulu Natal.
Profitability for the second half of the 2009 financial year is expected to be lower than that of the first
half owing to continued anticipated slowing of sales in the retail sector. But, it is within Africa that
Hardware Warehouse believes its unique and simple business model will enable sustainable margin
growth. The short to medium term strategy of selective expansion within the SADC region continues to
receive critical attention, and the company is currently seeking strong alliances for this expansionary
objective during late 2009 and 2010.
On the local front, strategic emphasis has been placed in securing large scale government tenders to
assist local housing departments and large contractors with a turnkey solution for their crucial housing
Whilst a large portion of the company’s customer base falls within the lower to middle income rural
groups, Hardware Warehouse has identified that its customer needs are becoming more aspirational
and will thus continue to adapt its strategy accordingly. With the acquisition of the On-Tap franchise,
incorporating Tiles-On-Tap, in a portion of the Eastern Cape region, the group has diversified its
customer base to include urban, middle to high LSM groups, plumbing and other contractors.
In line with the company’s achieved growth, management believes it would be prudent to continue its
current policy of not declaring a dividend.
Hardware Warehouse Holdings Limited Ticker: „HWW‟
Further enquires please contact
Shaun Miller Hardware Warehouse 043 726 6341
ChilliBush Investor Relations 011 646 7152
Lynsey Pharo ChilliBush Investor Relations 082 079 7961
Renata da Silva ChilliBush Investor Relations 084 304 7793
Notes to Editors:
Hardware Warehouse is a retailer of low cost building materials and associated products, selling directly
to predominantly cash paying customers, including homebuilders, home improvers, contractors, traders
as well as government organisations. Although lower to middle income rural groups have comprised the
core customer base thus far, the group has recently diversified its support base to include urban, middle
to high LSM groups, plumbing and other contractors.
Hardware Warehouse was established in 1996 in King Williams Town, where its first warehouse-style
operation quickly expanded to three stores. From this base, the company opened another one to two
stores per year in the towns of Alice, Butterworth, Port Alfred, Mdantsane, Ngcobo, Mthatha, Cofimvaba,
Lusikisiki, Sterkspruit and Queenstown. The company has expanded its footprint into Kwa-Zulu Natal
and Mpumalanga and plans to expand into the other provinces of South Africa and neighbouring
A large portion of the company’s customer base falls within the lower to middle income rural groups; it is
however experiencing increased exposure to urban customers. As part of its growth strategy, Hardware
Warehouse is establishing a presence within these areas, where higher margins may be achieved.
Acknowledging that the buying of materials to build or improve a home can be a significant expenditure
and a daunting process to its target market, the company has developed a specific environment and
approach to make the selection and buying of products both comfortable and understandable.
Hardware Warehouse’s core competencies are in the understanding of its niche market, the precise
selection of retail sites and the choice of product range to meet the particular needs of its target market,
always ensuring that its product range remains at the most competitive prices.