Massmart, with total sales of R86.5 billion, comprises two Business Units operating 423 retail and wholesale stores, in 13 sub-Saharan countries. Through our widely-recognised, differentiated retail and wholesale formats, we have leading market shares in the General Merchandise, Liquor, Home Improvement and Wholesale Food markets. Our key foundations of high volume, low cost and operational excellence enable our price leadership.

Group performance

Massmart’s total sales for the 52-weeks ended 27 December 2020 of R86.5 billion represents a decline of 7.7%, with a 7.5% decline in comparable store sales. Sales for the Group were impacted by the Covid-19 pandemic and more specifically by restrictions on the sale of certain product categories.

An increased focus on optimising our product and promotional mix, combined with shifting towards the everyday low price (EDLP) proposition resulted in the gross margin increasing by 147 bps to 20.4% from December 2019.

In light of top-line pressure and the significant impact of the Covid-19 pandemic on cash flows, we remain focused on improving expense management and continuing the trend from our interim reporting period, further savings have been realised through our sustainable cost saving initiatives. This is reflected in an excellent cost performance with total operating expenses decreasing by 0.3% over the prior year period.

A trading profit of R1,172.7 million was reported, representing a 5.5% increase on the prior year.

For the year, the Group incurred total retrenchment costs of approximately R132.5 million. This related to the closure of the 23 DionWired stores, the previously announced potential closure of 11 Masscash stores, the reorganisation of the Game store level operating model and the reorganisation of certain corporate support functions into centralised Centres of Excellence.

As a result of current market conditions and as part of an annual impairment assessment, the Group deemed it necessary to perform reviews of the carrying value of Goodwill and certain store assets. Consequently, the Group has impaired goodwill relating to the Cambridge and Fruitspot businesses. In addition, the Group impaired the assets relating to the meat processing facility in Massfresh. Certain store level assets have also been impaired. The consolidation of the Group’s various head office locations and a strategic shift away from fresh and frozen offerings in the Game business, resulted in further impairments being recognised.

Fluctuations in Rest of Africa currencies continue to negatively impact the Group, especially in relation to foreign denominated leases and payables. These contributed to the foreign exchange loss of R381.1 million.

Despite pressure associated with lower cash flows from restrictions relating to the Covid-19 pandemic, a combination of ongoing focus on working capital management and reduced interest rates resulted in net finance costs improving by 3.4% to R1,7 billion during the period. Cash interest to financiers reduced by 15.6%.

The Group reported a net loss of R1.8 billion for the period, compared to a loss of R1.3 billion during the same period in 2019, while reporting a headline loss of R0.9 billion for the period compared to a headline loss of R1.2 billion during the same period in 2019.

Operating environment and Covid-19 impact

The global outbreak of the Covid-19 pandemic has presented unique and significant challenges in both our economic and operating environments. The South African Government, and other African countries we operate in, implemented various measures and restrictions in an attempt to curb the spread of the virus. While we fully support safety protocols, various restrictions have had a significant negative impact on our trading. These trading restrictions have led to a further deterioration of the already weakened South African economy, with increasing unemployment rates, continued Rand depreciation and a further contraction of GDP, placing additional financial strain on consumers.

During the five-week level 5 lockdown period, introduced from 26 March 2020, the sale of non-essential goods, General Merchandise, Home Improvement, Liquor and tobacco products were prohibited. None of our South African Builders stores were permitted to trade during this period, severely impacting our Home Improvement business. The above categories combined contributed approximately 56% of the Group’s total sales in the 52-week period ending December 2019.

With the introduction of level 4 at the beginning of May 2020, all Builders stores, in South Africa and the rest of Africa, were permitted to recommence trading albeit with restrictions on the sale of certain product categories. The sale of Liquor and tobacco products remained prohibited.

Liquor trading was permitted under level 3 lockdown from 1 June 2020, with restricted trading hours. On 12 July 2020, Liquor trading was once again prohibited, while tobacco sales still remained prohibited from March 2020. South Africa moved to level 2 lockdown on 18 August 2020 and to level 1 lockdown on 21 September 2020. Under both these levels, liquor trading was permitted but with restricted trading hours with tobacco sales once again permitted. On 11 November 2020 liquor trading was permitted during all licensed hours, however trading hours were again restricted from 15 December 2020 and a total ban reintroduced on 28 December 2020 as part of the risk-adjusted lockdown level 3 measures. On 1 February 2021 it was announced that liquor trading would be permitted once again but with restricted trading hours and from 1 March 2021 liquor trading was again permitted during all licensed hours.

Massmart estimates total lost full year sales relating to Covid- 19 restrictions, which included extended restrictions on normal trading of liquor and tobacco products, to be approximately R6.1 billion when compared to 2019. During the 2020 reporting period, additional employment and operating costs (R132.4 million) were incurred in response to trading and operational challenges, including ensuring a safe shopping and workplace environment for customers and employees. Included in the employment and occupancy costs are Government supported Temporary Employment Relief Scheme (TERS) benefits and negotiated rental relief of R288 million received by the Group during the period.

The Group continued to focus on preserving cash during the turnaround plan implementation, which was further amplified during the various lockdown levels.

During the level 5 lockdown in particular, and continuing thereafter, we paid suppliers in full and on time, which contributed to enhanced supplier relationships, ensuring no disruption in the supply of stock. Supplier payment terms were also renegotiated, where possible, to preserve cash while taking care of the most vulnerable smaller suppliers. The Group also continued to pay employees’ salaries and benefits in full and on time.

Group overview

Financial review

Massmart’s total sales for the 52 weeks of R86.5 billion represents a decline of 7.7%, with a decline of 7.5% in comparable sales and year-to-date internal sales inflation of 5.3%. Sales from our South African stores decreased by 7.9%, with comparable stores sales decreasing by 7.6%. Total sales from our rest of Africa stores decreased by 5.4% in Rands, and by 6.9% in constant currencies. On a comparable store basis, our rest of Africa store sales decreased by 6.6% in Rands and by 7.4% in constant currencies.

The sales performance across our major categories is reflective of the dramatically shifting purchasing patterns of consumers during the Covid-19 pandemic, as well as trading restrictions. Food and Liquor sales of R49.1 billion decreased by 8.2%, Home Improvement sales of R13.9 billion decreased by 2.1% and General Merchandise sales of R21.6 billion decreased by 9.9%.

A combination of product and promotional mix optimisation and shifting towards the EDLP proposition resulted in gross margins improving from 18.9% to 20.4%.

Our continued focus on cost savings as part of the cost reset strategy, which was further accelerated by the lockdown, resulted in total operating expenses declining by 0.3% over the prior period. Employment costs, the Group’s largest cost category, decreased by 0.9% (with a comparable decrease of 0.9%), due to the closure of DionWired stores, recruitment freezes and the impact of the TERS and skills development levy relief. We also paid R12 million of once-off bonuses to our front-line staff during April in appreciation of their commitment during the most severe lockdown period.

Occupancy costs decreased by 9.7% (with a comparable decrease of 6.7%), mainly as a result of rental relief from landlords and lower utility costs as a result of the lockdown. Rental re-negotiation benefits were also realised, particularly during the second half of the year.

Depreciation and amortisation decreased by 1.2% (and by 1.5% on a comparable basis) due to reduced capital investments with a primary focus on cash preservation.

Included in other operating costs are once-off expenses which relate to value enhancing turnaround plan costs. Also included are implementation costs associated with the SAP S/4 HANA ERP system go-live in Game during the period, as well as maintenance costs of the Hybris web and fulfillment platform implemented in Makro in 2019.

The above resulted in a trading profit of R1,172.7 million compared to a trading profit of R1,111.2 million in the same period in 2019.

As part of the Group’s portfolio optimisation project, restructure costs of R132.5 million were incurred. This relates to the closure of the 23 DionWired stores, the potential closure of the 11 Cambridge and Wholesale Cash & Carry stores, the reorganisation of the Game store level operating model and the reorganisation of certain corporate support functions into centralised Centres of Excellence.

Goodwill and other asset impairment costs of R798.7 million were recognised during the period. This related mainly to the goodwill impairments in our Cambridge and Fruitspot businesses combined with store level and the meat plant asset impairments.

Fluctuations in various African currencies continue to negatively impact the Group, especially in relation to foreign currency denominated leases and payables. Finance costs relating to borrowings other than lease liabilities amounted to R556 million and decreased by 15.6% compared to the prior year. Total net cash finance costs, including the interest cost related to our lease obligations, remained flat, decreasing by R7.7 million.

The Group’s effective tax rate of 6.5% (2019: -18.9%) resulted from not recognising certain deferred tax assets, disallowed goodwill impairment losses and the taxation charge on profit-making entities.

Financial position

Capital expenditure was cautiously managed to preserve cash during the period. The Group continued to invest in IT infrastructure and the refurbishment of existing stores. Total capital expenditure for the period amounted to R1,034.1 million, down 24.6% from the same period in 2019. This, together with the impact of asset impairments, resulted in property, plant and equipment decreasing by 4.4%. Expansionary capital expenditure amounted to R764.2 million, of which IT infrastructure was R292.9 million mostly associated with the SAP S/4 HANA ERP system in Game, while replacement capital expenditure amounted to R269.9 million.

We continue to focus on improving working capital. Operating cash inflows before working capital movements of R4,559.5 million improved by 6.1% over the prior period resulting from concerted efforts in cash preservation. The Group’s inventory balance remained relatively flat compared to 2019 levels. Substantial progress has been made in clearing the Group’s aged stock however lower than expected sales in December resulted in a higher stock holding with inventory days increased by six days. While trade receivables decreased by 6.3%, debtors days remained unchanged at eight days, despite pressure on our wholesale and commercial customers. Trade creditors decreased by 1.7 % while creditors days increased by six days.

Despite the Group incurring a R1,753.4 million net loss during this reporting period, ongoing focus on liquidity, and pro-active management of cash flow resulted in net debt (excluding debt related to lease liabilities) increasing by only R152.6 million representing a 6.3% increase compared to the prior period.


We are thankful to all our associates, especially our frontline associates, who have adapted to new ways of working during these unprecedented times and continue to contribute to the Group’s performance and serving our customers. We are proud of the role we played as an essential goods provider during the lockdown period, while ensuring a safe environment for customers and associates. We are also thankful to the Board and Management teams for their continued support and commitment to the Group.


On 25 February 2020, the resignation of Enrique Ostalé from the Board, Remuneration and Nominations Committee was announced. The appointment of JP Suarez to the Board and Remuneration and Nominations Committees was also announced, effective 25 February 2020. On the same day shareholders were informed that Charles Redfield was nominated for appointment as a non-Executive Director of the Board, effective 25 February 2020.

On 6 March 2020, Phumzile Langeni’s resignation from the Risk and Audit Committees to focus on her other Massmart Board and Committee duties was announced, with effect from 21 May 2020.

The appointment of Sandile Lukhele as the Group Company Secretary was announced on 13 August 2020, with effect from 1 October 2020. Sandile assumed the role of Senior Vice President, Massmart General Counsel and Company Secretary and serves as a member of Massmart’s Executive Committee.


Total sales for the nine weeks to 28 February 2021 of R13.9 billion represents a sales decline of 6.6%, with a 6.5% decline on a comparable sales basis. This decline is attributed mainly to the liquor ban in January and delayed reopening of schools.

We expect the uncertain operating environment, constrained consumer financial health position and negatively impacted economy related to the Covid-19 pandemic to persist. While trade in all our categories is currently permitted, the imposition of new restrictions remain uncertain. We however remain, confident that we will continue to effectively navigate through this difficult period and with the support of our exceptional employees we have a renewed focus on our number one priority, our customers.

The financial information on which this outlook statement is based has not been reviewed and reported on by the Company’s external auditors.


Our current dividend policy is to declare and pay an interim and final cash dividend representing a 2.0 times dividend cover, unless circumstances dictate otherwise. Due to the headline loss reported and the need to preserve cash, as a result of the uncertain economic outlook, no final dividend has been declared. No final dividend was declared in December 2019.


Mitchell Slape
Chief Executive Officer

Mohammed Abdool-Samad
Chief Financial Officer

04 March 2021