Wrap Text
CEO's AGM Statement
Massmart Holdings Limited
(Incorporated in the Republic of South Africa)
Company registration No. 1940/014066/06
JSE Code: MSM
ISIN: ZAE 000152617
("Massmart" or “the Group”)
CEO’s AGM Statement
Here is a brief sales and performance update for the Group’s businesses.
As noted in last week’s SARB MPC meeting, the South African economy remains muted,
with most risks tilting to the downside, including Food inflation, interest rates and the Rand’s
exchange rate. Retail competition remains intense, which is good news for customers.
For the first 20 weeks of the 2015 financial year, Massmart’s total sales growth is 9.5% and
comparable sales growth 7.4%, with year-to-date sales inflation of 3.9%. These sales
growths suggest market-share gains, coming from a sharp focus on, and effective execution
of, our customer offering.
Massdiscounters’ total sales growth is 10.5% and comparable sales growth 5.5%, with
inflation of 2.2%. In South Africa, Game has strong comparable sales growth of 6.8% which
flows from improving operational execution and clarity on our merchandise range and
offering. A soft base in the prior year also assists. Pricing remains extreme as players fight
for share, and so whilst we are seeing margin recovery in Game it is not as strong as might
be expected. Trading across most African countries is tough for diverse reasons, but
common factors include lower resource prices and US Dollar strength. In Game Africa, total
Rand sales growth is 9.1% and comparable sales growth 1.2%. This soft comparable sales
is adversely affecting earnings growth in Game Africa. Dion Wired’s total sales growth is
6.1%.
We are encouraged by Minister Patel’s recent announcement concerning an official inquiry
into, amongst other things, tenancy arrangements in shopping malls. Some major food
retailers continue to defend lease exclusivities, thereby inhibiting competition and in some
cases preventing smaller businesses from entering shopping centres. Regardless of how
these restrictions may be characterised by the major retailers, we believe them to be
intuitively anti-competitive.
Makro is performing well, with total and comparable sales growths of 11.6% and inflation of
4.4%. Retail execution is superb and an upper-income orientation may also be assisting.
Our Retail Food participation continues to grow. There is severe price-pressure in
Wholesale, led by intense competition and deflation in commodities. Whilst small, online is
growing and we are seeing new opportunities and challenges in almost equal measure.
Makro will shortly be field-testing lockers at selected Makro stores and forecourts.
Massbuild’s total sales growth is 15.5% and comparable sales growth 11.6%, with inflation of
5.4%. Customers continue to support this powerful retail format and all four of our brands
are performing strongly, showing further market-share gains. Sales growth in our five stores
in Botswana and Mocambique remains very strong.
In Masscash, Wholesale’s total sales growth is 2.8% and comparable sales growth 2.9%,
with inflation of 3.9%. Commodities are an important component of our basket and this
category’s challenges are causing margin pressure. The disturbing xenophobic outbreaks
have caused sporadic disruptions to both our and our customers’ trading. Local and foreign
small traders make the South African lower-income informal sector vibrant and they trade at
exceptionally low margins, thereby benefitting their customers. As seen in Game, trading
conditions in our Africa Wholesale stores are tough with total sales growth of 4.0%.
Cumulatively, these pressures may cause Wholesale’s earnings to be below last year. In
Retail, total sales growth is 12.5% and comparable sales growth 7.6%. Competition is
intense, compounded by commodities’ deflation. The first instance of our regional roll-out of
SAP successfully went live last week.
The Group remains focused on our strategic objectives of: improving profitability, growing
food and DIY in South Africa, growing into Africa, and online. During 2015 we have, or will,
open a net 19 and six new stores in South Africa and Africa respectively, representing net
space growth of 3.9%.
Under the outgoing BBBEE codes we are proud of keeping our Level 4 rating.
Our next sales update is for the 26-week period ending June 2015, to be released in mid-
July.
The above information has not been reviewed and reported on by the Company’s external
auditors.
Johannesburg
27 May 2015
Sponsor
Deutsche Securities (SA) Proprietary Limited
Date: 27/05/2015 09:07:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
