Massmart reports 7.7% decline is full year sales despite slight improvement in fourth quarter

SOUTH AFRICA – Massmart, Walmart owned South African retailer has reported that its group sales for the 52 weeks ended December 27 fell 7.7% to R86.5 billion (US$5.8 billion) while comparable store sales decreased by 7.5%, as a result of Covid-19 trading restriction.

The economic impact of the pandemic on consumer spending was evidenced by a general reduction in foot traffic. The company has indicated that during the traditional November 2020 Black Friday, trading was softer than those seen in 2019.

The company’s extension of Black Friday promotions throughout the month of November did mitigate the impact of softer Black Friday weekend sales to some extent.

Sales at its South African stores decreased by 7.9% while those for the rest of Africa also registering a decline of 5.4%.

The retailer has however noted that in the fourth quarter, the sales had improved from earlier in the year despite a decrease of 4.1% over the same period last year to R25.6 billion (US$1.7 billion).

Massmart’s fourth quarter sales decline by 4.1%, a slight improvement from half-year 5.9% decline

This is a slight improvement in the trajectory of H2 sales, which ended with a decrease of 5.9% over the same period last year.

Trading for the 4th quarter of 2020 saw many of the previously imposed Covid-19 related trading restrictions lifted, which allowed trading to resume in most categories.

Liquor trading, however, continued to be impacted by limitations on trading hours as well as reinstated restrictions as announced by the Government in mid-December.

Massmart was struggling even before Covid-19 hit, and brought in Walmart veteran Mitchell Slape as CEO in September 2019 to spearhead a turnaround effort.

In January 2020 the company announced a project to re-organise the group into a leaner, more agile two business unit structure supported by shared Centres of Excellence.

This initiative moved quickly and included the closure of Dion-Wired and outsourcing our SAP applications development and support to the Walmart India Development Centre.

It also resulted in the successful centralisation of previously autonomous support functions into shared, group-wide, Centres of Excellence covering: Real Estate, Supply Chain, Information Technology, Goods Not for Resale procurement and Human Resources.

Massmart also concluded a managed-services agreement, covering its financial transaction processing activities such as tax, with US professional services firm Genpact.

Mid-last year, the chain store received a R4 billion (US$230m) inter-company loan from its parent company Walmart to help it offset liquidity constraints.

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