Thin-ice game after net loss of R1.03 billion in 2021

Walmart will continue to support Massmart through its losses as the company implements changes at subsidiaries like Game needed to turn the business around.

This is according to Massmart CEO Mitch Slape, who said the Sunday Times that this support is not unconditional, and that their patience with Game had limits.

Massmart has had three consecutive years of losses. In 2021, The game was to blame for almost 47% – R1.03 billion – of the company’s net loss of R2.2 billion.

Slape explained that Walmart was aware that Massmart’s management team was interfering with Game.

This included the sale of fourteen stores in East and West Africa and the sale of fifteen “non-essential” stores in South Africa.

According to Slape, if they get to a point where they don’t believe Game can be reversed, they would “evaluate it and make the appropriate decision.”

In its financial results for 2021, Massmart said its performance was affected by two waves of Covid-19 and the resulting lockdowns, as well as civil unrest.

“Black November and holiday season trade was also impacted by inventory availability, resulting from the destruction of two distribution centers during the July unrest,” the company said.

Massmart lost its main import processing center during the July 2021 violence and looting and faced vendor stock-outs in the electronics and home appliance supply chain.

Looting of Makro in KwaZulu-Natal in July 2021

Alcohol bans and restrictions put in place during the lockdowns have cost Massmart around R1.8 billion in lost sales. According to the report, this resulted in an estimated loss of trade margin of R193 million.

Alcohol sales accounted for 15% of total sales in 2021, compared to 13% in 2020.

According to Slape, the Russian-Ukrainian conflict could aggravate the situation or provide an opportunity.

“The fallout we’re seeing from some of them could lead to higher inflation [and] we certainly see it in commodity prices and things like that,” he said. Recount Cape Talk.

“I also think it creates an opportunity for Massmart in the sense that we’re focused on cutting costs, keeping costs down and making sure we’re able to keep our prices as low as possible.”

He explained that if price increases were needed, Massmart would aim to be the last to implement them.

Massmart’s brands include Builder’s Warehouse and Makro, in addition to a range of food-focused retailers. It is majority owned by US retail giant Walmart.

Builder’s Warehouse saw growth in 2021, recording a trading profit of R1.18 billion, up from R1.03 billion in 2020.

Last year, Massmart announced that it was sell some of its food-focused retailers to Shoprite Checkers for R1.36 billion.

The company’s financial proceeds would be allocated to the repayment of bank facilities used, investment in e-commerce and areas of goods in which Massmart is the market leader, such as general goods, DIY and wholesale. of food and alcohol.

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Ann J. Cox