By Nqobile Dludla
JOHANNESBURG (Reuters) -South Africa’s Massmart Holdings is eyeing 9.4 billion rand ($613 million) in additional sales in the next five years through store expansion, the retailer said on Monday, after reporting a wider annual loss on Monday that sent its shares down more than 13%.
Massmart, majority-owned by Walmart Inc, is mostly done with a turnaround plan to stem losses in some businesses while shutting underperforming stores, reining in costs and integrating its supply chain network.
It had started last year to move beyond the turnaround to focus on investing in core businesses and those offering high returns.
The retailer has been struggling for a couple of years to lift sales and return to profit, hurt by constrained consumer demand and underperformance of its Game chain. COVID-19 restrictions, store looting and damage from civil unrest last year have compounded its problems.
Massmart CEO Mitch Slape told analysts the retailer was pursuing growth opportunities in its core general merchandise, home improvement, wholesale food and liquor businesses.
About 72% of the group’s 2022 capital expenditure will be allocated to e-commerce – or online sales – and expanding the store footprint of its high return general merchandise operations, of food & liquor wholesaler Makro and home improvement Builders chains.
During the next five years, Massmart will boost the number of Builders’ stores in South Africa by 50% from 112, generating sales of between 1.4 billion rand and 2.4 billion rand per annum, Slape said. The number of Makro stores will be increased by 25% from 22, generating sales of between 5 billion rand and 7 billion rand.
Group sales fell by 1.9% to 84.9 billion rand in the year ended Dec. 26, with comparable store sales up by 1.7%. Its 2021 headline loss from total operations was 1.5 billion rand, compared with a loss of 924 million rand in 2020.
By 1121 GMT, shares were down 13.49% to 41.83 rand, on track for their worst daily loss in over 2-1/2 years.
($1 = 15.3351 rand)
(Reporting by Nqobile Dludla; editing by Uttaresh.V and Bernadette Baum)
