Weighing up Massmart’s struggle
Its recent poor trading update does not bode well for the retail and wholesale sectors, writes Marcia Klein
Massmart’s May 24 trading update, when the share fell 18% in a day and contributed to its decline from R165 in mid-April to R116 now, is not just of concern to its own shareholders. It is also a sign of things to come from the consumer-facing retail and wholesale sectors this year. Deflation, economic contraction, higher Vat and escalating petrol prices and an increasingly competitive and saturated market will affect retail and wholesale results — and share prices — for the remainder of the year at least. Without meaningful sales increases, companies have been left with cost reduction as their only viable response, and that can go only so far. Massmart’s hopes for improved sales momentum in 2018, expressed earlier this year, have not materialised, as improved confidence after Jacob Zuma’s resignation has not translated into more spending by lower-and middle-income consumers. For the first 19 weeks of the 2018 financial year, Massmart’s sales grew just 0.8% to R31.4bn while comparabl...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.