Massmart focuses on market leading product categories

Source: IOL

Massmart, the owner of Makro, Builders Warehouse and Game stores has said it is poised for accelerated growth as it continues to implement its turnaround strategy, according to its latest integrated annual report.

The group has said in the report released earlier that a significant outcome of the turnaround plan to date has been re-organising and introducing new ways of working to unlock its strengths, and deriving the resultant benefit to the business.

“This has mostly involved leveraging Massmart scale, and Walmart networks and expertise, to lower the cost base and implement better ways of working to create a significantly more competitive platform for future growth,” Massmart said.

The approach is to accelerate omni-focused growth that is responsive to shifting consumer behaviour centred on the Southern African Development Community (SADC), and to focus on categories in which it is a market leader, namely home improvement, general merchandise, and wholesale food and liquor.

“We have approved a multi-year e-commerce investment plan that leverages our store network and DC assets, underpinned by a mobile-first approach. I am pleased by the progress we have made in a relatively short period,” the report said.

While the company has not been performing well, looking ahead, Massmart said some of its strategic highlights for growth included acquiring OneCart and WumDrop to enable on-demand and last-mile delivery capabilities.

It has also launched mobile applications for Makro and Builders within the VodaPay Super App, which is extending the company’s reach to new customers.

“We also made numerous enhancements to our websites resulting in significant improvement in conversion rates. With this solid foundation, we are now focused on improving the customer proposition and end-to-end journey, while leveraging all the new and enhanced digital assets to drive accelerated growth,” the group said.

Massmart said the financial statements in its annual report had no modifications from its audited annual results for the 52-weeks ended December 2021.

In its results for the 52-weeks ended December 2021, the retailer reported a 65 percent decline in headline earnings per share to a loss of 705.5 cents per share, with a loss for the year of R2.2 billion, from R1.75 billion before.

“Massmart’s total group sales for the 52-weeks ended 26 December 2021 of R84.9 billion represented a 1.9 percent decrease compared to the same period in 2020, while comparable-store sales grew by 1.7 percent over the same period. Gross margin decreased by 191bps to 18.5 percent. Excluding inventory write-downs as a result of the civil unrest, gross margin decreased by 45bps to 19.9 percent,” it said.

In the financial section of the report, the company said during 2020, capital expenditure on projects was deferred, where possible, to preserve cash in an attempt to mitigate the impacts of Covid-19 on the business.

‘As economic activity increased in 2021, there was a commensurate increase in capital expenditure. The group continues to invest cash responsibly with expenditure being re-prioritised to re-open stores impacted by the civil unrest,” it said.

Total capital expenditure for the year amounted to R1.38 billlion, and increased by 33.2 percent compared to 2020, the company said.

“Expansionary capital expenditure amounted to R902.5 million, of which leasehold improvements and fixtures, fittings plant and equipment amounted to R733m, and was associated with the refurbishment of selected existing stores.

“Capital expenditure relating to maintenance amounted to R247.5m. An investment related to the acquisition of OneCart amounted to R228m. Overall property, plant, and equipment decreased by 4.3 percent, which was driven primarily by the impairments recognised, as well as the classification of the balances related to the discontinued operations as held-for-sale,” Massmart said.

 

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