A muted festive season – Game and Makro owner continued to bleed sales

A Game store on January 13, 2020 in Johannesburg. South Africa.
A Game store on January 13, 2020 in Johannesburg. South Africa.
Gallo Images/Papi Morake
  • Massmart says its 2020 sales tanked 7.7% due to lockdown restrictions and the economic impact of the pandemic on consumer spending.
  • Its fourth quarter which is usually the best period to bump up sales for retailers recorded a 4.1% sales decline.
  • The owner of Makro and Game says Black Friday was "softer" and December was "muted".

Massmart which owns South Africa's big retail chains, including Makro, Game and Builders Warehouse may not have come out of the red yet, even with a refreshed strategy and closure of struggling stores like Dion Wired.

On Thursday, a trading update published by the retail giant showed that the fourth quarter of 2020 delivered another disappointment as its sales continued to decline, thanks to the lockdown restrictions which left many households' budgets stretched to the maximum.

Massmart had already suffered a big blow in terms of sales in the first half of 2020 because of the lockdown and restrictions in selling high-margin products like alcohol. This created a R1.2 billion loss for the first half.

Now, Massmart has announced that after a bleak fourth quarter, its sales for the 52 weeks ended on 27 December decrease by 7.7% compared to the same period in 2019 to R86.5 billion. And 2019 – with higher sales than 2020 – was not a good year either for the bottom line, as Massmart reported a R1.1 billion headline loss then.

"The economic impact of the pandemic on consumer spending was evidenced by a general reduction in foot traffic, particularly in regional shopping malls, impacting sales in many merchandise categories during the 4th quarter," wrote the company in the trading update.

No festivity in the last Christmas

Massmart said after a "softer" than usual Black Friday in November, December didn't come to the party either as both foot traffic and sales remained muted. The outlier was sales in home improvement and DIY categories which were stronger during the period – as they have been for most retailers throughout the lockdown.

The retail group said its extension of Black Friday promotions throughout the month of November did mitigate the impact of softer Black Friday weekend sales to some extent. But this did not stop the group's fourth quarter sales from falling 4.1% to R25.6 billion.

The restrictions and bans in alcohol sales continued to haunt Massmart over the fourth quarter too as the government reinstated trading restrictions in mid-December, before announcing a total ban a day after the retail group ended its 2020 financial year.

While Massmart did not provide an update this time on how much sales were lost by the restricted alcohol trading hours in December, it previously reported that it lost approximately R1.1 billion in liquor sales in the nine months to 27 September when compared to the same period in 2019.

On the positive note, the decline in sales in the second half showed some improvement from the first half which ended with a decrease of 5.9%.

Massmart will provide further detail on its sales performance and how this affected its bottom line on 8 March 2021 when it presents its annual results for 2020.

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
Brent Crude
All Share
Top 40
Financial 15
Industrial 25
Resource 10
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Yes, and I've gotten it.
21% - 1375 votes
No, I did not.
52% - 3424 votes
My landlord refused
27% - 1820 votes