Massmart reports lower sales following Covid-19, unrest and supply chain challenges

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Game's total sales fell by   8.1% in the year ended 26 December 2021.
Game's total sales fell by 8.1% in the year ended 26 December 2021.
Gallo Images/Papi Morake

Makro owner Massmart’s group sales fell for the year ended 26 December 2021, following a period marked by Covid-19-related alcohol sales bans, looting and global supply chain shortages.

In a trading update on Friday, Massmart said its group sales for the 52-week period amounted to R84.9 billion, which is 1.9% lower than the same period in 2020.

The group, which also owns the Builders and Game brands, said its total comparable stores sales were 1.7% higher, however.

It said 43 of its stores were damaged in the July unrest that took place in KwaZulu-Natal in 2021. However the impact on two Makro stores hit the group’s second-largest sales category hard, resulting in sales declining by 9.7% in the fourth quarter of 2021 compared to the same period in 2020.

That said, Makro’s total sales for the 52 weeks rose by 6.6% to R29 billion and comparable sales increased by 10.6%. Despite the government imposed Covid-19 sales bans, liquor had a comparable sales growth of 39.8%, while comparable general merchandise sales grew by 7.2%.  

With regards to food, Makro saw a slight increase in comparable sales of 1.5%.

"Business activity, specifically in the hospitality and catering sector remains at lower-than-normal levels, as this industry was impacted by various levels of trading restrictions as well as international travel restrictions during the year," said Massmart.

The group’s wholesale and cash-and-carry division, made up of the Jumbo Cash & Carry and Shield brands, had a 6.3% decline, which Massmart attributed to lower sales in the hospitality, restaurant and catering sector due to Covid-19.

Builders, on the other hand, saw a 7.1% increase in total sales.

Game suffered a total sales decline of 8.1% at R15.3 billion, as mall-based foot traffic slowed down as consumers came under financial pressure. 

"The Game supply chain was particularly susceptible to unrest related supply chain disruption that resulted in insufficient in-stocks of some core appliances and home electronics in the period following the unrest, exacerbated by lower in-stock levels on key lines of certain electronics and appliance products as a result of global supply shortages," Massmart said.

The group’s discontinued operations, made up of Cambridge, Rhino and Massfresh were also hit hard, with their sales falling by 18.8% to R7.2 billion. 

Massmart’s share price fell by more than 3% on Friday morning, following its update.

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