SA retailer Massmart expects bigger loss as half year sales flat

SOUTH AFRICA – Walmart-owned South African retailer, Massmart expects its headline loss in the half year period ended June 2022 to increase by at least 51% to a possible loss of R974 million (US$58.1m), from R645 million (US$38.5m) in the previous period.

The total group sales according to its trading update, amounted to R41.3 billion (US$2.47 billion), being broadly in line with the same period last year.

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Stores sales in South Africa increased by 2.4% while total sales, measured in Rands, from our Rest of Africa stores increased by 1.6%, with comparable store sales increasing by 1.3%.

Pleasingly, Liquor sales performed strongly, with like-on-like sales on a continuing operations basis increasing by 21.3% over the same period last year.

This reflects sales recovery in its Hospitality, Restaurant and Catering (HORECA) and wholesale customer base.

Meanwhile, food sales increased by 6.4% on a like-for-like basis over the same period last year, also supported by recovery in the HORECA sector

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Sales relating to General Merchandise, Massmart’s second largest product category by value, have been softer as consumers prioritised non-durable goods spending in the context of rapidly increasing food, energy and transport cost inflation. Like-on-like General Merchandise sales declined by 1.4% compared to the same period last year.

Overall sales from continuing operations, which excludes Cambridge, Rhino and Massfresh, amounted to R38.1 billion (US$2.27 billion), an increase of 1.9% over the prior year period, with comparable store sales from continuing operations increasing by 4.3%.

Total sales relating to continuing operations in South Africa increased by 1.9%, with comparable stores sales increasing by 4.6%.

On the other hand, total sales from continuing operations in the Rest of Africa increased by 1.6% and by 1.3% on a comparable store basis.

The sales process of the Rhino, Cambridge and Massfresh businesses continues, as such, the results of both stores are treated as discontinued operations.

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Recently, the Competition Commission recommended that Massmart’s sale of Cambridge Food, Rhino and Massfresh to Shoprite for R1.36 billion (US$81m) be approved.

To this end, total sales from discontinued operations of R2.9 billion (US$173m) were 19.7% lower than the same period last year, with like-on-like sales being 17.2% lower.

Sales were directly impacted by the July civil unrest including stores that remain closed and product categories that were not re-introduced into stores that have re-opened.

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