ARB in retail venture

2011-02-11 00:00

JSE-LISTED electrical wholesaler ARB Holdings will roll out a major retail concept in the coming months, possibly starting with KwaZulu-Natal following the acquisition of R10 million premises in the province recently.

ARB CEO Byron Nichles told The Witness that the new retail concept is known as “ARB Connect” and will form an integral part of the company’s growth prospects.

ARB, which is based in KZN, this week posted solid growth in its interim financial results for the six months ended December 31, 2010, on the back of six new branches and the recent acquisition of Paragon Electrical.

Revenue rose 13% to R614,7 million while headline earnings per share was steady at 15,07 cents from 15,19 cents in the comparable period.

The black-empowered company, which employs more than 450 people nationwide, has a comprehensive footprint across the country, with 13 branches in Durban, Pietermaritzburg, Gauteng, Cape Town and East London, among other centres.

Nichles said they were pleased with the results, which were achieved in a challenging trading environment following the post-Fifa World Cup construction slowdown. He stressed that although the company continues to eye further acquisition and expansion opportunities, this will not be achieved at all costs.

ARB’s “cash is king” approach has seen it hold net cash on hand of R187 million.

“We’ve always been a well managed, conservative group from a managing the balance sheet perspective.”

Nichles said the new retail concept, ARB Connect, sees the company focusing on smaller electrical contractors, as well as the average do-it-yourself consumer.

“Traditionally we’ve supplied to large industry such as manufacturers and into infrastructure projects. This [ARB Connect] is more of a retail store, attracting over-the-counter business.

“It’s a cash sale business so we won’t have the credit risk, and we’ll be able to achieve slightly better margins. It complements the volumes at our bigger branches very well. Also, we can leverage our existing infrastructure.”

He added that the location of each store will be critical as convenience for the consumer is a key priority.

Nichles added that growth is likely to come from the new ARB Connect stores, its appetite for acquisitions and organic growth spurred by a recovery in mining, manufacturing and the wider economy.

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