Massmart extends losses in South Africa as 2021 riots sting

Massmart Holdings fell the most in more than two months in Johannesburg after the Walmart-owned South African retailer said its first-half loss widened.

Walmart expects to report a headline loss per share, which strips out certain one-time items, of as much as 450.3 South African cents for the six months ended June 26, compared with a loss of 298.8 cents a year earlier, when it announces full results later this month, the company said in a trading update Tuesday.

Chief Executive Officer Mitchell Slape, the Walmart veteran tasked in 2019 to turn around the Johannesburg-based household goods specialist, has faced a string of difficulties ranging from pandemic-induced supply chain problems to a week of deadly South African riots a year ago.

Consumer spending is under pressure from rising interest rates, with the central bank hiking aggressively to counter inflation that hit a 13-year high in June, while frequent nationwide power cuts have slowed economic growth.

Slape has already slimmed down the retailer and introduced broad cost cuts. Still, Massmart’s Game chain is struggling as cash-strapped shoppers buy fewer high-margin products such as fridges and washing machines.

“The consumer has not had anything like a decent wage increase, bond costs have gone up, food has gone up and the petrol price is 50% higher than what it was a year ago,” Syd Vianello, an independent analyst, said by phone from Johannesburg.

“With Massmart’s product mix, the higher margin discretionary spend items are affected more. This is the problem the CEO faces on top of trying to fix Game. It couldn’t have come at a worse time.”

The stock slumped as much as 9.9%, the biggest intraday drop since May 19, and was 3.5% lower by 12h57 local time.

That brings the decline this year to 42%, compared to the 10-member FTSE/JSE Retailers Index’s 7.6% retreat. Massmart also flagged increased finance costs and a one-time lease exit settlement charge during the first six months.


Read: Makro launches new mobile shopping app

Must Read

Partner Content

Show comments

Trending Now

Follow Us

Massmart extends losses in South Africa as 2021 riots sting