Advertise with

Massmarts' losses are expected to widen to R395million and R425m compared to last year’s loss of R95m.
Massmarts' losses are expected to widen to R395million and R425m compared to last year’s loss of R95m.

Massmart profit severely hit by weak sales, losses


By Sandile Mchunu - Aug 1st, 09:16

Massmart Holdings' share price declined by more than 17percent on the JSE after the group said it expected to report a decline in earnings across all of its four divisions for the six months to end June, mainly impacted by losses in Massdiscounters. 

Its losses are expected to widen to R395million and R425m compared to last year’s loss of R95m.

The loss in the division is expected to turn the group’s headline earnings of R204.1m reported last year to a loss of between R530m and R550.4m during the period.

The slide in Massdiscounters has seen its chief executive Albert Voogd resign in July and be replaced by an interim chief executive Andrew Stein.

Massdiscounters also appointed Riaan Turton as finance director and Kathrine Madley as marketing director as well as Neville Hatfield as merchandise director with effect from July.

The share price took a knock after the release of the trading update as it slid to R43.77 a share, down from Monday’s closing price of R58.90 before closing at 49.80.

Massmart said the expected results were disappointing for the group. “Margins were lower-than-anticipated across all divisions in May and June, which resulted in a disappointing group financial performance for the six months to end June,” the group said.

Massmart operates four divisions which include Massdiscounters, Masswarehouse, Massbuild, and Masscash.

Masswarehouse is expected to report a trading profit of between R320m and R370m but is 24 to 34percent lower than last year.

“Much of the lower profitability is caused by the soft sales, margin pressure from the lower sales participation of general merchandise and expense growth caused partly by the new Makro store opened in Durban North in March,” the group said.

Massbuild will report a trading profit of between R238m and R266m, which is 5 to 15percent lower than last year as a result of lower sales and expense growth.

Masscash is expected to report a trading loss of between R180m and R210m compared to last year’s trading loss of R4m. “Despite improved sales in the wholesale business, this weak profit performance was caused by margin pressure in that business, weak sales growth in the retail business and expense growth,” the group said.

Masscash chief executive Kevin Vyvyan-Day also announced his resignation with effect from the end of August and will be replaced by interim chief executive Deepa Sita.

Massmart expects to release its results on August 29.


Related News

SA "Black Friday" sales expected to rise 30% year-on-year
18/10/2019 - 12:50
South African businesses have begun preparing for what looks to be another bumper Black Friday trading day, with sales predicted to be up 30 percent from last year, online largest payment service provider PayGate said.

Pick n Pay unveils its revamped "On Nicol" flagship store
18/10/2019 - 10:59
Pick n Pay’s flagship store On Nicol officially welcomed customers after a comprehensive revamp. The refurbished store has an exciting array of new offerings with the very best in retail concepts developed in South Africa and from around the world. Customers can expect an enhanced fresh food experience, a huge focus on product quality, a much-improved range, innovative third-party services, and refreshed customer service.

Consumers are pushing transformation in the retail industry
18/10/2019 - 10:54
Hearing from some of the best speakers in the retail industry, 480 minutes of thought-provoking and relevant insights, amazing networking opportunities and the exchange of ideas. The realisation that the retail sector is rapidly changing and to survive and ensure sustainability, businesses need to evolve – it is no longer a ‘nice to have’ – it’s a necessity – this was the 2019 SACSC Congress.

Marks & Spencer targets new store concept in bid to drive growth
18/10/2019 - 10:18
For a taste of CEO Steve Rowe’s ambitions to transform Marks & Spencer Group (M&S), look no further than its newly refurbished shop in London’s Clapham neighbourhood.

Food garden provides sustenance and jobs in rural community
18/10/2019 - 09:45
Community food gardens are often started to provide fresh vegetables to underprivileged people living in rural areas, but in many cases, these small-scale farms also offer employment in places where jobs are hard to come by.