JOHANNESBURG (Reuters) -Massmart said on Friday its half-year headline loss narrowed 40.8%, helped by higher sales despite fresh COVID-19 restrictions and amid signs that the South African retailer’s turnaround strategy continues to pay off.
The retailer, majority owned by Walmart, is in the middle of a turnaround plan, which involves closing non-performing stores, selling fresh food assets, reining in expenses and improving margins.
“The period has been characterised by continued group-wide expense control and margin growth. This together with strong builders’ home improvement and Makro general merchandise and liquor sales has contributed to a much improved trading profit performance,” Massmart Chief Executive Officer Mitch Slape said.
Its headline loss from total operations narrowed to 645.4 million rand ($43.35 million) in the 26 weeks ended June, from a loss of 1.09 billion rand in 2020. The loss in continued operations came down by 56.8%.
Massmart’s total sales rose 4.4% to 41.3 billion rand, while it swung to a trading profit of 444.2 million rand, supported by strong profit before interest and tax increases at Builders, up 184%, due to the home improvement trend and at its wholesale division, which was up 70%.
Sales from its South African stores increased 8.1%, while total revenue – measured in rand – in all stores outside South Africa fell 10.1%, affected by currency fluctuations over the first half of the year. When measured in constant currency, sales rose by 1.6%.
In a sign that the company’s turnaround plan was on track, the gross margin increased by 43 basis points while expenses decreased 1.8%.
Massmart said it also delivered a further 380 million rand in cost savings, taking total banked cost savings to 1.1 billion rand in the 18 months ended June, against a three-year target of 1.8 billion rand.
($1 = 14.8887 rand)
(Reporting by Nqobile Dludla; Editing by Christian Schmollinger and Sherry Jacob-Phillips)
