Massmart sees double-digit gross sales slide amid lockdown

Retail and wholesale large Massmart reported an 11.9% slide in whole gross sales (R28.2 billion) for the 19 weeks ending Could 10 due largely to the Covid-19 lockdown and commerce restrictions in South Africa, its largest market.

In a trading update on Monday, the group stated the lockdown had a “vital impression” on regular buying and selling since a substantial share of its items couldn’t be offered through the five-week Stage 5 lockdown.

“Gross sales from our South African shops amounted to R25.three billion, 13.1% decrease than final yr, with comparable retailer gross sales lowering by 13.2%,” it stated. “Complete gross sales from our ex-South Africa shops amounted to R2.9 billion, 1.three% greater than final yr, with comparable shops lowering by zero.three%.”

Though not talked about in its newest Sens assertion, the closure of the group’s DionWired shops is more likely to have contributed to a decline in gross sales.

Massmart to close non-performing stores
Massmart reports its first FY loss since listing on the JSE

In a earlier buying and selling replace on March 30, the group famous that whole gross sales had elevated 1.three% for the 13-week interval ended March 29, in contrast with the prior yr, whereas comparable retailer gross sales elevated by zero.9% over the identical interval.

This confirmed that the group noticed a peak in gross sales as South Africans launched into panic shopping for within the final two weeks of March, after state of catastrophe measures and plans for a lockdown had been introduced. Nonetheless, the commerce restrictions following the lockdown have negated the quick peak in gross sales, as seen within the double-digit decline in gross sales for the interval to Could 10.

Gross sales bans

Whereas a few of these commerce restrictions have been eased below Stage four of the lockdown, which got here into impact on Could 1, liquor and cigarette gross sales proceed to be banned.

“Massmart was unable to commerce within the majority of normal merchandise, dwelling enchancment and liquor merchandise for many of April. These untradeable product classes signify a good portion of our general merchandise providing,” the group stated on Monday.

“The contribution of those product classes to gross sales within the 2019 monetary yr was as follows: Basic Merchandise (26%), Liquor (15%) and Dwelling Enchancment (15%). Given the excessive stage of contribution of those classes to whole gross sales, April Covid-19 gross sales had been considerably decrease than can be the case below regular buying and selling situations.”

The group reiterated that it has a powerful stability sheet, noting that based mostly on money stream forecasts, it “has enough money services” and sources to fulfill its obligations.

Learn: Massmart CEO slates ‘ridiculous’ rent escalations

“The intensified stress ensuing from prolonged Covid-19 buying and selling restrictions elevated the each day deal with liquidity and money stream administration,” it stated.

“Consistent with good monetary observe, Massmart continued to deal with prudent money stream administration and initiatives to enhance money technology efficiency. These included initiatives to barter rental reductions and improved, mutually helpful phrases with strategic suppliers.”

Massmart stated that it “met all fee obligations” all through the lockdown interval and has continued to pay all workers in full.

“We are going to proceed to proactively work with all suppliers and stakeholders to handle our money place going ahead.”