Cost control keeps Massmart buoyant
By Andries Mahlangu - Feb 24th 2017, 10:30
Africa’s second-largest retailer manages to fend off tough trading conditions in the year to end-December with tight cost control.
Tight cost control helped Massmart fend off tough trading conditions in the year to end-December as it lifted its trading profit 11.9% to R2.6bn.
Africa’s second-largest retailer grew its headline earnings 15.6% to R1.3bn from the year-earlier period.
Total sales were up 7.7% to R91.3bn while comparable store sales rose 5.4%. Product inflation as at 6.7%.
Nineteen stores were opened and 10 closed, which resulted in a total of 412 stores at December 2016. Gross margin inched up to 19% from 18.9%.
Operating expenses were tightly controlled, increasing 7.7% over the previous year, and great expense control resulted in comparable expense growth of only 5.4%.
The group is split into four divisions:
• Masswarehouse, which houses Makro, grew sales 11%, outpacing product inflation of 6.5%. Excluding new stores, Masswarehouse grew sales 7.6%. Trading profit was up 4.4%.
• Masscash, whose brands include Cambridge Food and Jumbo Cash, grew sales 7.5%, while comparable sales rose 7.9%. Trading profit was up 28%.
• Massdiscounters, which houses Game and Dion Wired, grew sales 5.3% against product inflation of 4.8%. Excluding new stores, sales growth was 1.5%. Trading profit rose 54.8%.
• Massbuild grew sales 5.6% against production inflation of 4.7%. Comparable store growth was 1.7%. Trading update was up 2.7%.
The company declared a final dividend of 224.8c per share.
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