While the austerity measures and store shedding measures announced by Edcon to regain profitability tends to overshadow talk about the state of the South African retail market, the latest financial results from other listed retailers do not paint a bright picture.

With the exception of Mr Price Sport and the Pepkor Group, retailers reported sales growth of less than 5% and some divisions reported negative comparable store sales growth.

Most of the listed retailers, however, mention the negative impact of the later start of the school year in January on December sales – but report an upswing of sales in January.

Retailer Reporting period Results  until Retail sales growth Sales value Comparable store growth
Mr Price Group Q3 (3 months) 28-Dec-19 3.50% R7-bn 0.70%
Mr Price Apparel Segment 3.20% 0.10%
Mr Price Sport 7.30% 2.60%
Pepkor Group 3 Months 31-Dec-19 7.60% R20.9-bn
Pep and Ackermans 6.40% 3.20%
Pepkor Speciality Division 1.60% -0.60%
Massmart Group 52 weeks End Dec 2019 3% R93.7-bn 1.50%
Massdisounters (incl Game) 0.30% R19.8-bn -2.10%
Masswarehouse (Makro) 2% R29.4-bn -0.30%
Woolworths Fashion, Beauty, Home 26 weeks End Dec 2019 2.20% 0.90%

Massmart

Restoring Game to profitability is a key priority for Massmart, the group told investors. It plans to do this by “restoring sales growth, recovering margins and improve execution to our low-cost discount proposition”. Massmart plans to reset Game’s focus by removing fresh and frozen food and re-introducing clothing essentials. It will also work on improving the availability of stock.

Game will work towards being less reliant on promotions, therefore improving its margin management, and will leverage its sourcing scale to reduce the cost to them of the goods they sell.

As part of Massmart’s efforts to create a more efficient and customer-centric organisation, the group is streamlining its four divisions into two units (Massmart Retail and Massmart Wholesale).

By merging Makro and the group’s Cash & Carry business, Massmart has created a R50-bn wholesale and B2B division. “Specifically it offers suppliers the biggest single Wholesale route to market on the African continent. An entity that will be integrated and driven by world class Makro wholesale processes and systems”

It is also creating Group Centres of Excellence where it will house the supply chain, IT and finance departments, and it will focus on better capital deployment. By it all being together, Massmart estimates that the new integrated supply chain will help save them between R504-m and R1.7bn.

Massmart will do store reviews within each portfolio to identify stores that aren’t performing well and will also evaluate businesses in the portfolio to make sure it still fits in the group and has future success opportunities.

“In a nutshell, the plan is to improve on-shelf availability, reduce operating costs and working capital (stock), and improve supplier income,” the group reports. “This is characterised by creating one integrated supply chain that leverages skills, systems and physical assets (trucks and sheds).”

Mr Price Group

December trade was negatively affected by “stage six rolling power blackouts and prolonged periods of torrential rain in the inland areas, partially diluting the anticipated impact of the extra week of school holidays,” the group reports. Due to the shift in the school holidays and the Rugby World Cup, “markdown activity was required to manage stock levels going into peak season.”

Black Friday has also changed consumer spending habits prior to Christmas.

While Mr Price Sport grew sales overall 7.6%, sales growth in comparable stores was only 2.6%.

Pepkor Group

The group also mention the negative affect of the later start of the school year on December “back- to-school” sales and a shift of these sales to January on Pep and Ackermans. The Speciality Division, including Tekkie Town, reported negative comparable store growth, as reported here.

 Woolworths

“In South Africa the constrained economic environment, exacerbated by the disruption to trade caused by power outages and unseasonal weather in parts of the country, contributed to slower December trade,” the group reported.

Turnaround hopes are pinned on the new group CEO, former Levi Strauss president of American operations, Roy Bagattini. The former CEO Ian Moir was asked to move to Australia to try and fix the problems created by his acquisition of the department store chain David Jones.