Massmart rolling out more stores

The company, which owns Game, DionWired, Makro, Builders Warehouse, Jumbo and Trade Depot reported its results yesterday showing profit rose 23% to R2,2bn on a 14,3% rise in sales to R39,8bn for the 53 weeks to June.

It said it would open 32 new stores in the next three years in SA and 10 more in Africa.

“The roll-out of stores will mean additional space of 15%. We are also doing well with Game in Africa, with at least 10 new potential sites identified, two of which were recently approved in Democratic Republic of Congo and Angola,” chief financial officer Guy Hayward said yesterday.

Hayward said the challenge of opening new shops in Africa were delays in identifying the best sites as well as the administrative and logistical planning required.

In SA, electricity guarantees were the main problem.

“Municipalities cannot guarantee electricity,” he said.

Net trading space rose 1,9% and the number of stores stands at 242 following eight closures and 12 store openings in the financial year.

Hayward said real sales growth and low costs contributed to the group's profit.

“However, the general tightening in consumer spending was evident in slightly lower real group sales growth, a greater response to demonstrable value in promotions and entry-price point brands. There was also a shift in the method of payment with declining credit card usage,” Hayward said.

Food and liquor sales increased 17,1%, general merchandise sales held steady at 11,2% and home improvement sales grew 14,4%.

Masswarehouse (which comprises Makro) contributed R10,1bn, Masscash (Cash and Carry stores) R13,6bn, Massdiscounters (which comprises Game and Dion Wired) R10,4bn and Massbuild (Builders Warehouse, Builders Express and Builders Trade Deopt) contributed R5,6bn in sales.

The group said its African sales and trading profit performed at substantially higher levels than the South African business, which it estimated had lost R30m in trading profit due to the National Credit Act.

Headline earnings a share for the period rose 17% to 634c.

He said given the current economic environment, the group was cautious about the year ahead, but confident in its business model and the South African consumer economy.

Source: Business Day

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