As new CEO takes the helm, Massmart’s sees modest growth in international sales

During the first six months of 2019, total sales at South Africa-based Massmart’s international stores rose by 6.4% (in constant currency terms), compared with the year-earlier period, to ZAR3.9 billion (USD264 million). Same-store sales rose by 2.4%. Total international sales increased by 11.8% in ZAR terms. International stores accounted for 8.9% of Massmart’s total sales during this period, up from 8.4% during the first half of 2018.
Massmart currently operates more than 40 stores in nine sub-Saharan markets (11 in Botswana, seven in Zambia, six in Mozambique, five in both Namibia and Nigeria, four in Ghana, three in Kenya, and one in each in Tanzania and Uganda) under a number of banners: Game (general merchandise and food), Game Foodco, CBW (cash-and-carry), and Builders Warehouse.
Overall, Massmart incurred a net loss of ZAR832.4 million (USD56.6 million) during the first six months of 2019, compared with a profit of ZAR190 million (USD12.9 million) in the year-earlier period. Gross margin declined from 19.6% to 19.2%, with outgoing CEO Guy Hayward commenting: “We have controlled costs very well for the last few years and kept it well below sales growth, but unfortunately this year it popped up.” He also acknowledged “various internal missteps”, without going into detail.
Massmart’s share price has halved during 2019 to date, with Walmart veteran Mitch Slape taking over from Hayward as CEO earlier this month. Walmart acquired a controlling interest in Massmart during 2011, and the appointment of Slape has, for the moment, scotched rumours that the American giant is planning to offload its African subsidiary.
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