Massmart delivers strong result despite difficult trading environment
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Massmart today announced its interim results for the 26 weeks ended 26 June 2016, reporting a total sales increase of 8.7%, while comparable sales for the period increased by 6.4%. Despite the difficult trading environment, effective margin management and expense control resulted in Group trading profit, excluding foreign exchange movements and interest, growing by 13.5%.
Commenting on the results, Massmart CEO, Guy Hayward said: “Consumers are delaying purchases,
trading down and reducing spending on durable goods to support spending on semi- and non-durables.
This has meant general merchandise sales have softened while food sales have been stronger.
“Our businesses focused on sourcing well-priced merchandise and formulating deals that offer our
customers exceptional value, resulting in market share growth across all major categories.”
“The work we have been doing here is beginning to make in-roads. An independent price survey
conducted by Retail Price Watch identified Cambridge Food as being the cheapest retailer in the staples’
and beverages’ categories, while Makro was found to be the cheapest in the cereals and porridge
category,” Hayward said.
Massdiscounters total sales for the period increased by 7.6% and comparable sales grew by 2.4%
with product inflation of 4.4%. This sales performance was boosted by strong food sales in South
Africa, and a great sales performance in stores outside South Africa where Game’s total Rand sales
increased by 25.7% (and by 20.1% in local currencies).
DionWired performed exceptionally and reported good sales growth and significantly higher
The rollout of Fresh food continues with 82 Game stores now offering this category, and food and
liquor sales comprise 21.8% of Game’s total sales.
“Our focus on improving the Game customer proposition over the past two years, addressing the
merchandise execution and driving supply chain efficiencies, manifested in a positive margin and expense
performance. Massdiscounters’ trading profit before interest and tax increased by 110.8%,” Hayward said.
Masswarehouse total sales for the period increased by 9.2% and comparable sales grew by 7.2%
with product inflation of 5.5%. Given the dynamics of the consumer environment, sales growth
in food and liquor was higher than these figures while growth in general merchandise was lower.
Makro Carnival, opened in April, is the Group’s first store to make use of renewable energy, and is
Massbuild grew total sales for the period by 5.8%, with comparable sales increasing by 0.8% and
product inflation of 4.0%. Given the difficult consumer economy and lower confidence levels
among upper-income customers, coupled with substantially less construction activity generally,
there was declining sales growth in Builders Warehouse. However, outside South Africa, the Builders
Warehouse format continues to exceed expectations with total sales in stores outside South Africa
growing by 60.3%.
Despite intense competition in the wholesale and retail food market, Masscash total sales increased
by 10.3%, comparable sales increased by 10.9% and product inflation was 7.9%. Food inflation
accelerated from April 2016 as drought-induced commodity prices escalated. Masscash Retail,
through the Cambridge and Rhino formats, traded well, reporting comparable sales growth of 12.3%.
Hayward said the Group continues to expand and improve its ecommerce offerings in DionWired,
Makro and Masscash Wholesale. “Makro online remains profitable with first half sales growth of 100%,
while Dion-Wired achieved 38% growth in online sales. A Massbuild online pilot project to serve the
contractor and professional market should be operational before the end of 2016.”
For the 34 weeks to 21 August 2016, total sales increased by 8.3% and comparable sales increased
Measured Sub-Saharan African expansion remains a priority for the Group, and in the next two
years they anticipate opening five new stores (Ghana, Mozambique, Nigeria & Zambia) representing
African space growth of about 12.0%.
Hayward concludes: “The South African economic environment will likely continue to constrain consumer
spending across key Group categories including general merchandise and home improvement/DIY,
however our food and liquor categories will likely continue to perform well.”
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