Will Walmart call it quits in SA?

According to a recent Business Day article, Massmart – who owns brands such as Game and Makro – is in trouble.

The company recorded a R550-million loss to June 2019, and investors have been told earnings will likely be less than 50% of what they were in 2018.

  • Walmart is the world’s largest bricks-and-mortar retailer. The company paid $2.3bn to buy 52% of Massmart in 2011
  • Walmart paid R148 a share, but today share prices stand at R44 – a 70% drop in value
  • Speculation is rife that Walmart may pull out of SA rather than buy the other 48% of Massmart
  • SA won’t be the first country Walmart has exited. It also gave up on Germany, Britain and South Korea, and is currently scaling back in Brazil
  • In 2010, Massmart generated cash of R2.6bn and paid dividends of R822.4m
  • By 2018, cash flow was at R2.8bn, and dividends marginally lower at R750m
  • Massbuild (primarily Builders’ Warehouse) would be an easy sell but it would be a struggle to find buyers for Massdiscounters (Game and DionWired) – stores that have been hard-hit by online competition
  • Other businesses in the stable are Masswarehouse (Makro and The Fruitspot) and Masscash, whose brands include Jumbo Cash & Carry and Cambridge Food
  • By 2020 it will be clear whether or not Walmart can extract value from its African conglomeration, or whether it breaks it into its pre-1990s components and sells them off.

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My Office News Ⓒ 2017 - Designed by A Collective


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