Massmart’s total sales for the 2017 financial year* increased by 1% to R92.1-bn compared to 2016**, online sales increased by 47% and comparable store sales declined by 0.8%. “Very weak consumer confidence resulted in lower demand for durable goods, significant deflation in most major commodities impacted the wholesale business and we were negatively affected by generally weaker African economies and currencies,” explains Massmart CEO Guy Hayward.
“While these headline figures are indicative of the exceedingly difficult consumer environment that persisted in the period, they mask a much-improved performance in the second half of 2017,” Hayward points out. “In this second half, three of the four divisions recorded higher comparable sales growths than the second half of 2016, where year-to-date product inflation fell from 3.2% in June to 2.0% in December. Adjusting for product inflation shows that all divisions reported higher real comparable sales in the second half of 2017.”
Masswarehouse (Makro and The Fruitspot) increased total sales by 4% and comparable sales by 2.4%. Its online sales grew by 3.7% – 4% of Makro’s durable sales in November and December.
Overall, Massdiscounters (Game and DionWired) sales declined by 2.8% (comparable down by 4.2%). Game’s sales in South Africa were down by 1.9% (comparable down by 2.9%). In Africa its sales were up by 10.5% in constant currency, but down by 4.1% in Rand value.
On Black Friday the retailer recorded sales of more than R1-bn. Their online stores for Makro, Game, Dio-Wired and Builders Warehouse added to this success, says the group. Overall, online sales increased by 47%, with Makro’s online sales alone increasing by 37%.
Sales in the group’s South African stores grew by 1.5% during 2017 (comparable sales declined by 0.2%) and sales outside of the country grew by 3.5% (comparable sales growth of 0.8%) – comparable sales are measured in constant currencies. Total Rand sales decline outside of South Africa was 4.8% (11.9% during the first half of the year).
Massmart has 423 stores in 13 countries. During 2017, it opened 11 stores (space growth of 2.8%), including its 21st Makro store, and it plans to open another 72 Game stores in South Africa.
The group plans to increase its retail space outside of South Africa by 35% over the next three years. Currently, its 42 stores outside of South Africa generate 8.3% of the group’s sales (R181.1-m). Especially Ghana and Kenya are performing well.
- Game: 142 stores (including 11 in other African countries). During 2017, Game opened a store in Ghana, which increased trading space by 0.6% to 548 544m2.
- Makro: 21 stores. One new store was opened in South Africa, which increased trading space by 6% to 231 021m2.
* The past financial year, which ended 31 December 2017, had 53 weeks, but the data in this article is for the comparable 52 weeks. For 53 weeks, Massmart sales were up by 2.7% to R93.7-bn.
** Some of the 2016 figures have been adjusted retrospectively: “previously the value of inventory incorrectly included certain elements of preparing the product for sale while some rebates were immediately recognised against cost of sales rather than deferring these rebates in line with the movement of inventory, explains the group. “In addition, while preparing the 2017 group cash flow statement, we observed that elements of unrealised foreign exchange movements had been incorrectly included in the ‘Foreign exchange movement on cash and cash equivalents’ line on the 2016 group cash flow statement.”