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Massmart reports increased total sales growth

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financials-2015

Management team delivers good result with strong sales growth in a difficult economic environment

Key highlights

• Total Sales up by 10.4% (R78.173 billion)
• Operating profit before forex and interest up 4.3% (R2.015 billion)
• EBITDA before forex up by 6.7% (R2.887 billion)
• Strong performance from three divisions, with Game South Africa showing improved trading in the second half of the year

Massmart today announced its full-year results for the 52 weeks to December 2014, reporting a total sales increase of 10.4%, while comparable sales for the 52 week period increased by 7.5%. Group EBITDA of R2.9 billion, before foreign exchange movements, grew by 6.7% while operating profit, excluding foreign exchange movements and interest, grew by 4.3%.
While the South African consumer environment improved towards the end of 2014, low economic growth, inadequate job creation and persistent inflation continued placing pressure on consumers. Upperincome consumers remained resilient however, reflected in the robust demand at Makro and Builders.

Commenting on the results, Massmart CEO, Guy Hayward said: “In the context of tough trading conditions, we are pleased with these results. We saw great performances from
Makro, Builders Warehouse and Builders Express as they improved efficiencies. Game SA had a strong fourth quarter, growing profit and emphasising the potential of retail food,
while the performance of Game Africa was impacted by slow starts to new stores and weaker currencies. We have seen solid margin recovery at Masscash.”
Excluding foreign exchange movements, total operating expenses increased by 11.7% over the prior year. Comparable operating expenses were well controlled and increased by 7.1%,
which was below the growth rate of comparable sales.

Divisional performance In the Massdiscounters division, Game South Africa reported improved performance in the second half and had an especially strong fourth quarter where comparable sales grew by 8.1%. The rollout of fresh continues to have a positive impact on general merchandise sales.
In 2014 Game had South Africa’s fastest growing retail food proposition and now has 66 Game stores offering this category. Food and liquor sales comprise 19.4% of Game total
sales. DionWired continues to perform well and the brand remains the destination store in its category. In line with the Group’s move to omnichannel retailing, DionWired’s online
offering now comprises 2.3% of total DionWired sales, up from 1.8% last year.

Makro performed superbly in a challenging environment with total sales growing 11.8% and comparable sales for the 52 week period increasing 10.7%. In the year under review, the
Group successfully launched Makro online, which has seen significant traffic (more than 1 million visitors in the 30 days to mid-December). Massbuild reported another strong performance. The new Superstore format continues to exceed expectations and will soon expand stores beyond Gauteng. The Group is particularly encouraged by the success of the five Builders Warehouse stores in Botswana and Mozambique, including a strong performance by the new store in Maputo. Massmart is actively exploring sites in other southern African countries.
In the extremely competitive South African Wholesale and Retail Food environments, Masscash total sales increased by 8.0% and profits by 14.9%. Sales growth in Masscash’s
non-South African Wholesale business was 8.0% and there is exciting potential for the hybrid wholesale and retail formats in southern Africa.
Hayward concluded: “We are concerned by the fragile state of the South African economy.
We remain focused on our key strategic priorities: Operating excellence; growing retail food in South Africa; growing into high-potential markets in sub-Saharan Africa; building a
profitable online presence; and ultimately improving Group profitability.”

Ends –
For Media Enquiries
Annaleigh Vallie, Group Communication Manager
011 517 0000
Brunswick South Africa
Carol Roos
Gordon Kgaugelo Letsoalo
011 502 7300
About Massmart
Massmart is a managed portfolio of four divisions, each focused on high-volume, lowmargin, low-cost distribution of mainly branded consumer goods for cash, in 12 countries
in sub-Saharan Africa comprising 392 stores. The Group is the second largest distributor of consumer goods in Africa, the leading retailer of general merchandise, liquor and home improvement equipment and supplies, and the
leading wholesaler of basic foods.

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