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Massmart gives update on sales, Walmart

Johannesburg - Massmart Holdings [JSE:MSM] on Wednesday said that for the first 21 weeks of the 2011 financial year, its total sales growth was at 13.9% and comparable sales growth was at 7.9%, with financial year-to-date sales deflation running at 3.0%.

Speaking at its annual general meeting (AGM), chief executive Grant Pattison said that with consumer inflation and interest rates at their lowest levels in decades, Massmart was performing much as expected.

“With low food inflation, our food retail and wholesale businesses are under pressure. With low interest rates, our general merchandise and home improvement businesses are performing well. While there is no indication that recessionary times will return, there does seem to be some evidence that the consumer recovery may no longer be accelerating but rather holding at current levels,” he said.

“Those consumers still employed are doing well, but we have seen little recovery in employment levels in general. The strengthening rand continues to put our non-rand based businesses under pressure,” added Pattison.

Total and comparable sales growths in each division are 16.7% and 10.5% (9.5% deflation) in Massdiscounters; 10.2% and 8.0% (1.8% deflation) in Masswarehouse; 18.2% and 11.5% (0.4% inflation) in Massbuild; and 13.0% and 5.0% (0.5% deflation) in Masscash.

Pattison said that the group opened and acquired 19 stores in this financial year, a 5.5% increase in space.

Looking forward, the company said it had planned for a Christmas trading period at the current level of sales growth.

Massmart added that discussions with Walmart continue positively.

On September 27 2010, Massmart advised shareholders that it had received a non-binding expression of interest from Walmart and later updated shareholders as to the status of these discussions on October 28 2010.

"We are in communication with all major stakeholders concerning their interest in this potential transaction, recognising of course our regulatory obligations during an offer period and will make further announcements when necessary," said Massmart.
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