Johannesburg - Retailer Massmart Holdings [JSE:MSM] reported at its annual general meeting on Wednesday that for the first 21 weeks of the 2011 financial year total sales growth was 15.2% and comparable sales growth 8.8%, with year-to-date sales inflation running at 0.8%.
The group's CEO Grant Pattison said the South African economic cycle had moved into an inflationary phase.
"This would usually provoke higher interest rates but sensibly, the country's poor growth outlook and the weak and uncertain global economic conditions are keeping interest rates on hold at these historically low levels.
"Whilst the South African consumer environment is dominated by headlines of consumers' over-indebtedness, the reality is that household debt as a percentage of disposable income has improved to 2006 levels - at the same time, national inflation has been low for most of the past few years, and the employed have enjoyed above-inflation salary increases, all of these factors resulting in higher levels of disposable income," Pattison said.
He said it was perhaps not surprising that national retail sales data indicated a reasonably positive environment, which had also been reflected in recent sales updates from most listed retailers.
Total and comparable sales growth in each division are 12.8% and 5.6% (5.4% deflation) in Massdiscounters; 17.3% and 10.0% (1.9% inflation) in Makro; 13.7% and 9.0% (0.2% inflation) in Massbuild; and 15.9% and 9.9% (4.9% inflation) in Masscash.
Pattison said it had opened a net eight new stores in this financial year, representing a net 4.4% increase in space.
Included in these numbers are three new Makro stores - but two on a net basis, and the company's first Builders Warehouse store outside SA in Gaborone, Botswana.
The company also opened three Cambridge stores and, as of Wednesday, 10 Game Foodco stores.
Massmart said it had completed legal implementation of its Walmart transaction but the respective competition authorities' processes remain in various stages of appeal.
"Our legal representatives are dealing with these appeals, whilst management continues to engage, or attempts to engage, with opposing parties to understand better any remaining concerns.
"We remain vigilant in the implementation of, or adherence to, the South African Competition Tribunal's four conditions," the group said.
Global giant Walmart in June completed its acquisition of 51% of Massmart for R16.5bn.
Looking forward, Pattison said the group expected sales performance to continue to be strong, supported by its present investments in price, growth, capacity and integration.
"These investments are, however, expected to put downward pressure on operating profit, before foreign exchange translation, in the short term, particularly for the half-year to December 2011," he said.