Massmart Reports A 3% Rise In 2019 Sales

Massmart has reported on trading for the 52 weeks ended 29 December 2019, advising it is focusing on taking action to remedy impediments to performance.

Key highlights

• Total sales for year grew by 3.0% to R93.7 billion, while comparable store sales increased by 1.5%

• R1.5 billion selling, general and administration cost reset opportunity

On 30 January we announced six turnaround interventions, these are:

1. Unlocking benefits of Group scale by implementing a Retail and Wholesale focused operating model, supported by centres of excellence;

2. Establishing a R50 billion consolidated, lowcost Wholesale route to market with high relevance to customers and suppliers;

3. Positioning the Group supply chain to improve stock availability, increase supplier income, and reduce operating costs and working capital;

4. Relentlessly pursuing a R1.5 billion cost reset opportunity covering expense lines including; rental, utilities, technology infrastructure and applications software;

5. Driving significantly better basic operational execution at Game to restore sales growth, recover margins and operate as a low cost discounter; and

6. Closure (subject to a Section 189 consultation process) of 34 persistently unprofitable DionWired and Masscash stores.

Mitch Slape, who was appointed CEO of Massmart in September 2019, commented:
“Our Road to Recovery acknowledges that the core underlying business is strong and comprised of entrenched brands with high customer appeal. However, the landscape has changed, and we have been slow to respond. We are now acting with urgency to reset and unlock the real potential of our business.”

Divisional performance

Impacted by lower consumer spending on Durable Goods, Massdiscounters recorded an increase in total sales of 0.3% to R19.8 billion over the prior period. Encouragingly, Game South Africa saw foot traffic increase by 4% year-on-year, resulting in sales increasing by 1.9%.

Despite the significant slowdown in the construction sector Massbuild maintained its market leading performance in DIY, home maintenance and building supplies and grew total sales by 3.4% to R14.2 billion. Comparable store sales increased by 1.4%, while product inflation was 4.0%. Sales from the rest of Africa stores increased by 15.9% and similarly in constant currencies.

Masscash grew total sales by 5.6% to R30.3 billion supported by strong wholesale sales growth of 8.6%. Comparable store sales have shown a similar increase. Product inflation was 3.6%. Retail sales are flat on last year, testament to a very competitive market environment.

Masswarehouse recorded total sales of R29.4 billion, which was 2.0% up on last year, with comparable stores sales contracting by 0.3%. While General Merchandise sales remained flat on last year, Liquor sales grew by 3.5% with Food sales growing by 2.5%.

Outlook

The subdued economic environment experienced in the latter part of 2019 continues and we expect margin pressure to persist.

Massmart, powered by Walmart, comprises four divisions operating 443 stores across 13 sub-Saharan countries. Through its widely-recognised retail and wholesale formats (including Builders Warehouse, Cambridge Food, DionWired, Game, Jumbo Cash & Carry, Makro and Shield) it has leading shares in the General Merchandise, Liquor, Home Improvement and Wholesale Food markets.

Source : Massmart

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