SOUTH AFRICA – Massmart, Walmart owned South African retailer with presence in 13 countries in Africa has indicated that it will be reviewing its operations outside the Southern African region in the second quarter of 2021, as part of its turnaround plan.
This is in addition to its plan of offloading its food retail outlets Cambridge Food, Rhino and Masscash comprising The Fruitspot and a meat processing facility to focus on high returning businesses.
To this end the retailer has appointed Barclays to facilitate the disposal of the non-core businesses, reports IoL.
“It’s important for Massmart to focus on those businesses where we have established clear market leadership and in the case of Cambridge and Rhino and retail food in general our market share is relatively small,” CEO Mitch Slape said.
This move is part of the strategic shift made by the retailer last year, with the original plan involving shutting underperforming stores, exiting fresh food and launching clothing in its Game chain, which sells everything from electronics to gym equipment and home furnishings.
So far it has undertaken the revamping of Game stores, closure of 23 DionWired stores and sale of underperforming Masscash stores.
The Competition Tribunal of South Africa last month approved sell of eight Cash and Carry stores to unlisted Johannesburg-based Devland Cash and Carry, for an undisclosed amount.
“It’s important for Massmart to focus on those businesses where we have established clear market leadership.”
CEO Massmart – Mitch Slape
“The time, the energy and the investment to get that business into what we would consider a market leadership position is not a valuable use of the company’s resources,” Slape said.
Massmart has also unveiled plans to accelerate its e-commerce strategy leveraging the experience of parent company Walmart.
The supermarket chain owner which is also a wholesaler, said it has delivered more than 30 turnaround projects.
These had led to R600 million in total expense savings, contributed to margin uplift and significantly improved overall efficiency.
In the 52 weeks ended Dec. 27, gross margins rose by 147 basis points while expenses fell 0.3%.
Its headline loss, the main profit measure in South Africa, slightly narrowed to R924 million (US$62.1m) from a loss of R1.2 billion (US$80.7m) in 2019, while its net loss widened to R1.8 billion (US$121.1m).
Group sales fell by 7.7% to R86.5 billion (US$5.8 billion), hit by COVID-19 restrictions, with a 7.5 percent fall in comparable store sales in line with expectations.
The Game and Makro department chain owner estimated that it lost out on sales worth R6.1 billion (US$410.5m) in 2020 due to the restrictions.
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