Massmart total sales steal leadon competition

The group said sales from South African stores increased by 2percent while comparable SA store sales increased by 0.5percent. 

Total rand sales from its ex-SA stores grew by 1percent. However, the group said the results were down by 2.2percent with the inclusion of Shield, one of its brands, in the results and comparable store sales declined by 3.9percent. “Massmart no longer includes Shield with the group’s reported sales figures, but instead only includes Shield’s margin,” the group said. 

Ron Klipin, a senior analyst at Cratos Capital, said the Massmart total sales were up by 1.9percent and this was in line with consensus of 2percent, with product deflation at 0.7percent. “Major performers are likely to have been Makro, followed by Builders Warehouse, but showing a slower growth rate due to pressure on disposable income,” Klipin said. “Share price has rebounded strongly after the update.” 

Massmart is a South African retail and wholesale distributor, with 381 stores locally and 30 in the rest of the sub-Saharan Africa region. Its brands consist of Game, Cambridge Food, Shield, Makro, Jumbo, Shield, Rhino Cash and Carry and Saverite. Klipin said Game was likely to be under margin pressure as demand for durables and semi-durables should be lacklustre. 

“The deflation is another negative factor in the update. “The diversified business model has resulted in a fair result in a very challenging environment, with African currencies likely to have been a drag on profits,” Klipin said. Massmart shares rose 7.98percent on the JSE yesterday to close at R115. The group is expected to release its half-year results next month.