Massmart, whose brands include Makro and Game, intends to sell an additional 14 Masscash stores as it continues a turnaround drive and grapples with a R6bn sales hit from Covid-19.
The company, owned by the world’s largest grocer, Walmart, announced a turnaround plan in January 2020, as well as the potential closure of 34 DionWired and Masscash stores.
The announcement of additional disposals on Friday comes on the heels of news that the sale of eight of the Masscash stores will save 640 jobs, with the group still seeking buyers for three more.
Masscash stores target lower-to-middle-income consumers, and sell various goods, including cosmetics, groceries and liquor.
Massmart had 130 Masscash stores at the end of its 2019 year, generating about a third of group’s R93.7bn in sales. Massmart had been grappling with rising costs even before the pandemic struck.
Walmart veteran Mitchell Slape took over as CEO of Massmart in September 2019, and is driving a turnaround strategy that involves the rationalisation of the group’s store portfolio, and the reorganisation of its four divisions into two.
In an updated trading statement for the 52 weeks to December 27 2020, Massmart said it had seen the benefits of strong expense management, and trading profit is expected to be 3% and 8% higher than the previous year’s R1.1bn.
Massmart still expects its net loss to widen by 30.9%-35.9% from R1.3bn in 2019.
The group has put a R6bn figure on total sales lost due to Covid-19 restrictions, including on liquor, but said some of the effects were mitigated by rental relief from landlords, and benefits from the government’s flagship wage-relief scheme.
Group sales were 7.7% lower at R86.5bn, with Massmart saying job cuts cost it R132m.
In morning trade on Friday Massmart’s share was up 1.63% to R49.80, having lost almost two thirds of its value over the past three years.