Massmart disappointed by H1 sales trends so far | Fin24
 
In partnership with
Loading...

Massmart disappointed by H1 sales trends so far

May 25 2017 13:49

(iStock)

Company Data

MASSMART HOLDINGS LIMITED [JSE:MSM]

Last traded 99
Change -1
% Change -1
Cumulative volume 176523
Market cap 0

Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

Related Articles

Massmart shares climb as profits improve on costs

SHARE WATCH: Mixed bag of notable locals

Massmart announces 7.7% sales growth

Walmart-owned Massmart wins court battle against Pick n Pay

INFOGRAPHIC: Going green - How SA’s top 5 retailers stack up

Walmart pushing hard to catch Amazon in e-commerce

 

Johannesburg - Massmart [JSE:MSM] provided a brief sales and performance update for the group in a Sens statement on Thursday.

In late February this year, in the Massmart's December 2016 annual results release, it expressed cautious optimism about the 2017 financial year. This was predicated on signs of green shoots in the economy including the drought ending, resulting in declining food inflation; a stronger rand; potentially lower interest rates; and the recent improvement in the SA Reserve Bank (SARB) Leading Indicator.

The group said the nascent signs that some or all of these positive influences were coming to bear were unfortunately washed away by the negative economic impact of political events in late March and April that culminated in two credit-rating downgrades. The unfavourable impact on sales in discretionary product categories, such as general merchandise, has been notable and appears to be as strongly linked to weak consumer confidence as it is to underlying economic issues.

With the impact of Easter having now annualised, the sales trends for the first half of 2017 can now be reliably assessed and for the group the prognosis is disappointing. The group has, however, grown market share in all key general merchandise categories. Its share in major appliances, for example, has increased by 5% in a year.

Similarly, it regards its retail food sales growth as very encouraging and is outperforming the reported sector's market growth.

For the first 21 weeks of the 2017 financial year, Massmart's total sales growth was 0.3% and comparable sales declined by 1.9%, with year-to-date sales inflation of 4.4%.

READ: Massmart shares climb as profits improve on costs

Divergent sales trends

The group said these group figures mask divergent sales trends across geographies and categories. Total and comparable sales from its South African stores were 1.8% and -0.4% respectively, while the same figures from its ex-SA stores were -13.3% and -15.7% respectively in rand terms. Total and comparable sales from our ex-SA stores were -0.4% and -0.7% respectively in constant currency.

Massdiscounters' total sales declined by 1.3% and comparable sales declined by 3.3%, with inflation of 1.6%. Game South Africa's total sales growth was 2.1% and food and liquor sales in this business unit continued to perform strongly. Game Africa's total rand sales declined by 11.4%, but were up 8.6% in local currencies. The new SAP point-of-sale roll-out was completed successfully across all Game and Dion Wired stores in SA.
Masswarehouse's total and comparable sales growths were 3.9% and 0.7% respectively, with inflation of 4.9%. Food and liquor sales growths are stronger than general merchandise. Online sales are 48.0% higher than those of the same period in the prior year. Massbuild's total sales growth was flat and comparable sales declined by 0.1%, with inflation of 5.1%.

Total sales growth in SA was 2.0% while ex-SA's total rand sales declined by 21.0% and by 0.1% in local currencies. In Masscash, total sales declined by 1.3% and comparable sales declined by 3.7%, with inflation of 5.5%. Wholesale sales have been affected by both suppliers and customers being cautious about the impact of the price disinflation and price deflation across many commodity lines which causes them to reduce their purchases and inventory levels.

READ: Tailwinds have become headwinds for retailers

Ex-SA stores

Sales from the ex-SA stores have declined at rates similar to those seen in the other divisions, while sales in the SA business have also declined slightly. The newly rebuilt Jumbo Crown Mines store was opened in late April 2017 and has traded very well subsequently. In Masscash Retail, total sales growth continued its positive trend.

The group said the current levels of political, business and consumer uncertainty make it difficult to provide any useful trading expectations for the remainder of the 2017 financial year, but it does not expect the SA consumer economy to show any noticeable improvement during this time.
As regards its stores in the ex-SA countries, this second quarter marks the annualisation of the severe currency weakness in many of those countries and so it is possible that the group's reported rand sales will soon show a relative improvement in growth, it said.

Its next sales update is for the 26-week period ending June 25 2017, to be released in mid-July. The information provided in this update has not been reviewed and reported on by the company's external auditors.

Read Fin24's top stories trending on Twitter:

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest. 24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

massmart  |  retail  |  earnings reports
NEXT ON FIN24X

 
 
 
 

Company Snapshot

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

Would you switch to a bank that rewarded you for 'good' financial behaviour?

Previous results · Suggest a vote

Loading...