Massmart warns of wider loss due to Covid-19

Massmart expects its half-year loss to deepen by up to 42% because of the impact of the Covid-19 pandemic, the retailer said on Thursday, adding cost-savings were beginning to deliver results.

Majority-owned by Walmart and operator of supermarkets and wholesalers, including Makro and Game, Massmart has seen operating costs from Covid-19 safety protocols reach R62 million ($3.60 million) so far this year, while other indirect pandemic-related costs added R13 million, it said in a statement.

For the 26 weeks to June 28, Massmart’s total sales fell by 9.7% to R39.6 billion, with comparable store sales decreasing by the same amount.

Its headline loss per share, the main profit measure in South Africa, for the period will widen to between 483.3 cents and 519.9 cents, worse than the year earlier loss of 366.6 cents, the company said.

The carrying value of some store assets, as well as retrenchment costs following the closure of all of its electronic retail chain Dion Wired stores and 11 masscash stores, are expected to have a further negative impact.

The masscash division comprises Jumbo cash and carry wholesaler, Cambridge Food and Rhino cash and carry stores.

More positively, Massmart said cost savings are yielding results and expenses are growing less.

“While sales have been lower than the same period last year, an increased focus on trading discipline and driving everyday low prices, while maintaining our competitive pricing gap has led to enhanced gross profit margin percentages,” it said.

Its share price was almost unchanged, down 0.5% at 1220 GMT.