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A slow news week, frankly, and we haven’t heard much from Massmart lately, so here goes. Makro is going large for Braai Day this Friday, with Jan Braai, head of the National Braai Day initiative, taking up the tongs at the Makro Cape Gate store and 22,000 Makro customers nationally getting a taste of chicken wings basted in Mr. Braai’s proprietary marinade. In other Makro news, SA’s original big-box hybrid is teaming up with Unilever to offer deep discounts on a wide range of the latter’s product through the end of September. “As a customer-obsessed business, we care about making our shoppers’ lives better. Collaborating with Unilever will empower us to keep offering our customers their most-loved products at affordable prices, which should make a material difference to people’s daily lives,” says Kevin Maier, Merchandise Vice President: Food. They will also be running a swipe-and-win promo in which one lucky customer could win a cool R1m in Makro’s mRewards loyalty points.

Comment: Tough times, smart promos.

During the month of June, Makro managed to deliver 80% of all online orders within two days, while 92% of pickup orders were available for next day collection. This they attribute to their centralised e-commerce pickup & delivery capability with around 60 specialists across functions including e-commerce operations, customer operations and inventory optimisation. This team is supported by a dedicated group of product management and tech experts focused on enabling and accelerating its efforts. To Game now, which has just launched Season 2 of ‘The Game Game’ on the Roblox platform, where young players can experience all the joys of South African urban life, playing within a city block that reflects South African life and culture – including hadedas, potholes, and naturally, a Game store.

Comment: A smart move into the metaverse for a retailer whose sometimes rocky path has always been characterised by bold innovation.

The persistence of Walmart in its partnership with Massmart has been a source of ongoing interest to analysts, following a slow start and a rocky couple of years thereafter. Walmart has after all been known to exit geographies where it has not enjoyed early success. Last year, however, Walmart bought those shares in Massmart which it did not already own and has been hands-on in getting the South African business up to speed. One area of focus has been the website, which it has migrated onto a new micro-services-based platform that delivers new features, improved system performance, and faster development turnaround time. In the month since the switch was made, the rate at which customers transacted on the site improved by more than +30% and orders grew by an estimated +40%. The tech staff now includes 40 local product management professionals who coordinate almost 300 full-time Massmart technologists specialising in UX design and research, software engineering/development, architecture, product operations and product analytics, based in Walmart’s Tech Development Centre in Bangalore, India.

Comment: The power of a targeted intervention.

Back when the Trade Tatler was a scurrilous broadsheet, sold on street corners by plucky urchins every Wednesday morning sharp, there was a lot of speculation about which of our big retailers Walmart would be buying. Spoiler alert, it was Massmart, but why? For starters, Makro was probably the retailer that most resembled the Walmart model, so there was that. But according to Whitey Basson, he himself had a more than minor role to play in the decision, pointing to the cultural predilections of Massmart CEO Mark Lamberti, who, he said, was a Walmart man through and through. Basson’s thinking was that a Walmart-owned Pick n Pay would prove too stiff a competitor for Shoprite, which was not then the market-owning behemoth it is now. And having interested Walmart in Massmart, he then nudged the government into approving the deal on the condition that Massmart remain listed, and thus less able to make aggressive business decisions.

Comment: Truly, giants walked among us. Ackerman and Basson. Lamberti himself. Retail is poorer for their exit.

Massmart was an early adopter of the omnichannel approach to retailing, at least on these shores, and has been assiduous in the investments and appointments necessary to make it happen. Witness, last month, the introduction of Walmart’s Global Integrated Fulfilment (GIF) software to all Makro stores, with plans to expand into Game and Builders. Developed for Walmart and adapted for Massmart, GIF Store Assist is an order fulfilment software application that digitises and optimises the picking, packing, staging and distribution of online orders. “We have made significant investments to build and grow our e-commerce offering at Massmart,” says VP of Group eCommerce Pickup & Delivery, Merlin Otto. “Given growth in 2022 of over 90% across the e-commerce portfolio, our ability to efficiently process higher volumes of orders is a key success factor.” Order pick rates have increased up to +150% since implementation, with an overall -40% reduction in total order processing time.

Comment: Massmart’s strategic and methodical embrace of omnichannel has been one of the bright spots of its recent history.

Massmart has not been without its travails these past couple of years. But one area where it has retained a laser-like focus has been e-commerce, until now under the direct stewardship of Senior Vice President of e-commerce, Sylvester John, seconded from Walmart. With the appointment of Thembani Biyam to the position of Vice President: Group E-Commerce for B2C platforms, the business is set to bed down its omnichannel presence for continued growth. Biyam comes to Massmart with a background rich with such appointments as Country Manager for OLX, and CEO of South Africa’s first food delivery app, Orderin. One area where Massmart enjoys an advantage over its traditional retail competitors is in general merchandise. “Massmart is the market leader in general merchandise,” he avers. “Pairing that with a strong omnichannel offering through our extensive store footprint is what will set us apart from our competitors.” His first priority will be to optimise returns from the newly revitalised digital platform, which encompasses a new Game website and Makro app and the revamped Makro website.

Comment: With only 4% of the South African market currently in hand, there is plenty of room for growth in online shopping. Massmart is wise to make its play early.

Massmart’s Builder’s hardware brand joins a growing list of South African retailers who have tried their luck in East Africa and failed. Massmart announced a couple of weeks back that it would be closing its only Builder Warehouse, at the Waterfront Karen Nairobi, after three very tricky years. Particular issues, they say, include persistent financial losses and the inability to bring in stock due to stringent regulatory import requirements. The closure is not solely of concern to Massmart and other South African stakeholders. “(I’m) not sure why South African investments have found it hard to invest in Kenya unlike others,” says Carol Kariuki, CEO of the Kenya Private Sector Alliance (Kepsa). Ken Gichinga, chief economist at Mentoria Consulting has a theory: “While many South African companies understand the promising macroeconomic landscape of Kenya, they don’t spend enough time appreciating the equally important microeconomic elements of consumer behaviour, (and) price sensitivity, all of which are aspects of behavioural economics,” he says. “In the end they fail to connect with the customer.”

Comment: Partnering with local outfits is one way to go, as some of our bigger non-retailers like Stanbic and Old Mutual have found.

Checking in on Massmart, absent from these pages for some time now. Last Sunday, City Press reported that some Massmart stores were running low on basic items because of accounting issues arising from the transfer of merchandiser accounts to Walmart. Not so, says Massmart, nor with 97% of merchandise being sourced locally is there a need for such a transfer to take place. Saccawu, currently locked in a wage negotiation with Massmart, has also claimed some responsibility for the shortages – i.e. that suppliers are supporting the union’s higher staff wage increase campaign through delays – which again, according to Massmart, is untrue: stock levels at Makro are currently at 92%, a touch below the targeted 95%, but nothing to worry about. Any shortages, they say, are “primarily supplier service level related.” In other Massmart news, the business has been certified by the Top Employers Institute as one of South Africa’s Top Employers, under the pillars of “unite, develop, steer and attract.” Says Chief People Officer Chwayita Mareka, “We have elevated our internal efforts towards fostering a culture where everyone is – and feels included.”

Comment: South Africa’s retail landscape has not yet begun to reckon with the presence of a Walmart, undiluted and entrenched.

Monday started with a bang this week on the news that Massmart is on course to be owned outright by Walmart and delisted from the JSE. And that change-maker CEO Mitch Slape is stepping down and handing over the reins to Jonathan Molapo, who joined the business as COO in January (checks notes) 2022, from a career in the energy industry, most recently as CEO of Astron Energy. Walmart, which still sees Massmart as the platform for its ambitious Africa strategy, plans to buy all the shares it doesn’t already own for R62 each, a 53% premium to the last closing price, even as rival Amazon establishes a bridgehead on the continent. All of this was revealed on the presentation of the Group’s interims, in which it was also made known that turnover was up just +1.9% to R38.1bn, driven by food and liquor growth to the tune of 7.1%, with a trading loss of -52.4% to R377m.

Comment: The move by Walmart is a vote of confidence in our economy and our industry. The delisting will enable the business to pursue its cost-cutting and restructuring more aggressively, without shareholder scrutiny. And the arrival of Mr Molapo is a significant appointment in a sector more closely beginning to resemble the society it serves. For more on the results, <a href="https://www.tradeintelligence.co.za/App/Uploads/File/0/0/170393/220831_Woolworths%20FY2022%20Results%20Summary.pdf" target="_blank">go here</a>.

Massmart flagship Makro has been doing a roaring trade this past month in items you might need should, we don’t know, the national grid go on the fritz? Such lines include generators, inverters, gas cooking tops, cylinders, rechargeable globes and lanterns. “Year-on-year sales for alternate power related categories have gone up by over +300%,” observes DIY Merchandise Manager Gary Lindhorst, affecting bemusement. The business will soon be offering punters fully installed solar solutions, as South Africa’s de facto privatisation of micro-generation ramps up. In other Massmart news, the Group avers that its Game refurb, which we reported on last week, is showing evidence of effecting the hoped-for turnaround. One of the big successes has been the expansion of the baby category, to which 300 items have been added in some stores, which in turn reported a growth of +37%. And speaking of growth, the retailer has seen YOY online growth of +164% between April and May.

Comment: Sufficient cover against the arrival of Amazon? Time – and not too much of it – should tell.

Last week Massmart cut the figurative ribbon on its massive new Joburg DC at Riversands, and with it lifted the figurative veil on its supply chain strategy. The 75,000m2 facility is the second of three new warehouses in Massmart’s centralised network, which serves the different trading brands across the Group. Riversands specialises in high-volume, pallet-based products, and “This facility will give us the opportunity to deliver fast-moving products … at greater speed, thanks to the use of full pallets, with no need for re-packing inside the facility,” explains COO Jonathan Molapo. Walmart provided design input on the DC, the construction of which had to be fast-tracked following last year’s social unrest and looting. Every aspect of the construction has been geared towards optimal efficiency, with maximum use of natural light, LEDs lighting with motion sensors, and borehole water, and the preservation of the nearby wetland.

Comment: Massmart’s recent travails are well known. But the business seems to be putting the building blocks for future growth in place.

Massmart’s 100% acquisition of online delivery outlift WumDrop is complete, and this is apparently more than a mere formality. For starters, the integration of WumDrop into the business will enable Makro to speed up its delivery time from five days to two, to punters living within a 30km radius of their nearest Makro. WumDrop’s proprietary tech enables Makro to fulfil orders directly from stores, rather than involving a distant DC. WumDrop earned its reputation back in 2017 when it offered the capacity to deliver packages throughout South Africa based on the shopper’s smartphone location rather than a physical address. Knowing a good thing when it saw one, Massmart acquired a majority stake in the business shortly thereafter. In other Massmart news, the Group has noticed a shift in consumer behaviour in these difficult times. “Massmart has seen an increased interest around its private label products across all customer segments and will continue to invest in these areas,” says Group Private Brand Vice President Clyde Hill.

Comment: Massmart is striving diligently to meet the challenges of the times.

Doing the quiet work of futureproofing Massmart during a not untroubled ambit in the Group’s history is its supply chain team, which in recent years has made great strides in consolidating the logistics, warehousing and stock control systems across the business. One of the steps it has taken has been to consolidate drop-off for suppliers at three mega-DCs, at Brackengate in the Western Cape, Northfields in KwaZulu-Natal, and Riversands in Gauteng. The completion of these facilities was fast-tracked to help the Group get its supply chain up and running rapidly after the devastation of July’s civil unrest, creating a powerful platform for future supply chain efficiency and resilience. On the stock management side, the business is busy launching Trackmatic, a supplier platform that provides a data-led approach to improving stock forecast accuracy and will eventually allow Massmart to proactively manage supply constraints in the face of planned or known shortages.

Comment: Impressive work from a business which seems to have a lot of gas in the tank and an increasingly clear sense of where it wants to go.

A very tough year for Massmart, as evinced by its latest set of results: sales -1.9% to R84.9bn for the year through December (including discontinued operations of Cambridge Food, Rhino and Massfresh), with trading profit an appalling -83.3% down to R195.4m, and a net loss of R2.2bn, down a further -25.7% from last year. The business was hit by an impairment expense of almost R1.1bn, over half of which related to an unspecified issue with its S/4 Hana ERP system software. Massmart was also a notable victim of the July unrest, with 43 stores and two DCs targeted, and nine stores still closed. What, then, is to be done? Turnaround king (and CEO) Mitch Slape still seems sanguine: “We have intensified the pivot toward growth in our core general merchandise, home improvement and wholesale food and liquor offerings,” he says. In effect, the business has decided to put it all on black, with massive expansions in the pipeline for its two most successful trading brands, Makro and Builders, which will grow footprint in the next few years, with Builders in particular increasing its footprint by as much as 50%.

Comment: It’s going to be a long hard road home for Massmart, but there is a credible plan. Hopefully the next years will provide a suitable ecosystem for its fulfilment.

What should Massmart do re Game? There really are only three options, if you listen to the pundits. Turn it around, sell it, or shut it down. And with sales -8.1% for the year through December at the discount retailer, having shrunk for the past four or five years, you can be sure that Massmart are taking a look at all three. The issue with turning the business around is that this is likely to be a costly undertaking, at a time when Massmart is carrying heavy debt, including a R4bn loan from parent company Walmart. Selling is also complicated right now – Game’s woes have been heavily reported, and the business is unlikely to go for a premium. And cutting and running also brings its challenges, in the form of leases to exit and cross-sureties within the Group. Having said all this – Game has just opened two of its strongest-performing stores damaged in the July uprising, in Soweto and Vosloorus, with three more to come in KZN next month.

Comment: And honestly – an -8% dip is hardly apocalyptic. Maybe magenta’s still good for another couple of seasons.

So a Massmart update, then, for the year through December, telling the story of a year in which the Group’s solid turnaround strategy was largely frustrated by civil unrest in the middle of the year and ongoing fallout from the COVID-19 pandemic. Group sales fell -1.9% overall, although like-store sales were up by a razor-thin +1.7% GM plummeted by -9.7%, hit by the restriction on the global supply chain at the end of last year. Tellingly, sales at discontinued operations – the Cambridge and Rhino stores as well as Massfresh assets being bought by Shoprite – fell -10.6%. But the story of Makro is one from which the business might take heart: at 34% of Group sales, Makro grew turnover +6.6%, with liquor up +39.8% and even GM growing by +7.2%. Back to the downside: sales were down -8.1% at Game and -6.3% at the Wholesale Cash & Carry business. Builders grew +7.1%.

Comment: Essentially, a tale of two businesses – Builders and Makro vs the rest. It is to be hoped that the excellence that characterises the former may be brought through to the rest of the business.

A tough start to the year for Massmart, with the announcement that its headline loss per share will be at least 40% heavier than the loss it reported in 2020. This as a result of the civil unrest and looting that so brutally bisected what was already going to be a difficult year for the business. The business lost around R2.5bn in inventory and damaged or destroyed assets, with an accounting loss of R650m after insurance pay-outs. Sales for the year grew just +0.9%, to R69.7bn, dragged thither by the continued impact of the prohibition on a business which has been known to make a bob or two on the sale of booze. What to do? For starters, parent company Walmart will extend the term of a portion of the R4bn loan to the business, replacing R2bn of the loan by subscribing for a perpetual fixed rate unsecured note, if you’re interested in that sort of detail. And Massmart will be selling 15 out if its 114 Game stores to raise a bit of extra and stop the bleeding.

Comment: It is to be hoped that 2022 will be the year that Massmart begins its turnaround. The alternative is not something to contemplate right now.

A trading update from Massmart, in which the Men in Black report that total sales for the 39 weeks through September were regrettably flat, growing just +0.2% to R60.6bn, with like-store sales up +2.9% over the same period. Sales here in the Beloved Country showed more promise, with a +1.2% increase to R55.4bn, with like-store sales up +4.4%. This after the civil unrest of July, and 110 days of liquor sales lost to COVID. The business remains sanguine, however: its omni-channel strategy is building steam nicely with the launch of the Builder and Makro mini-apps and the acquisitions of WumDrop and OneCart. In addition, Black Friday looms, and implementation of Massmart’s turnaround plan continues. “Management is confident that despite the recent headwinds, the strategic growth initiatives announced are bearing fruit, and we fully expect this to gain momentum and continue in the medium to long term,” their words.

Comment: Massmart could use some better news round about now. As, no doubt, could their shareholders.

Bit of a shakeup in the upper echelons of wholesale, where Metcash CEO Jeff Adams is stepping down and will be replaced by Massmart Wholesale alum Doug Jones. Adams will return to the US having presided over a period of significant growth for the wholesale and retail giant. In other Massmart news, Makro and Builders have launched a series of mini-apps on the VodaPay super app, that will enable punters to shop online from the two stores’ catalogues using their mobile devices. Features will include almost 450 app-exclusive Makro and Builders deals, including surprise daily and R1 deals. And finally, the Men in Black have let it be known that they’ve reached an agreement for the purchase of 87.5% of the issued shares in FMCG marketplace and logistics platform, OneCart, which partners with leading retailers in South Africa to enable fast, flexible and efficient online sales and home delivery.

Comment: Massmart is making bold moves to consolidate its business and grow its online offering.

More on those Massmart interims, to which we alluded last week, and of which you can find a handy summary here. Group sales for the 26 weeks through June rose +4.4% to R41.3bn, with trading profit (including discontinued operations) up a deceptively barnstorming +266.6% to R444.2m. This was driven, they say, by growth in profit before interest and tax (PBIT) increases at Builders of +184% and at Massmart Wholesale of +70%, as well as the positive impact of turnaround interventions, including improved gross profit margins and delivery. Last week we reported on the pending sale of its underperforming food assets to Shoprite; another area of interest is the turnaround strategy at Game. The business piloted its first ‘Game Reimagined’ store in the Mall of Africa in September last year, started rollout of the programme in February this year and has refurbed 64 stores since, reporting double-digit growth in basket size and an average +13% increase in comparative sales growth at these locations. Massmart has also announced that it will be closing all 14 of its Game stores in West and East Africa.

Comment: Massmart’s leaner model seems geared for success in these more straitened times. Suppliers would do well to acquaint themselves with the constraints and opportunities this brings.

So as we were saying, in significant news for all parties, Shoprite has offered to purchase a number of Massmart’s non-core food assets for the tidy if not princely sum of R1.36bn. The businesses in question – as you will probably recall – are Cambridge Food, Rhino, Massfresh and 12 Cash & Carry stores. The sale is of course subject to the nod of the competition authorities, which should conclude their deliberations by March 2022. “The sale marks another step in the Group’s portfolio optimisation process and will, amongst other benefits, free up management time to enable increased focus on leveraging Massmart’s core merchandise and market strengths,” says CEO Mitch Slape. Massmart will use the cash to settle some bills, to advance its e-commerce projects, and to invest in some focus areas for the business, such as DIY, liquor, and wholesale food.

Comment: A leaner, more focused Massmart is good for its investors both here and abroad, good for suppliers who can target their offering more effectively, and good for South Africa’s consumers. Look out for more detail in the Group’s half year results next week.

A trading update of characteristic honesty from Massmart, which is executing its turnaround strategy in conditions that, to put it mildly, just never seem to get any easier. Its update for the half year through June indicates losses of between R745m and R836m, an improvement on the R907.7m it logged this time last year, but only just, after taking a half-billion rand write-down for Game’s losses. Group sales are up somewhere in the order of +4.4% to R41.3bn. Not accounted for are losses at Cambridge and Rhino, which are still on the market if you’re interested. Massmart has also let it be known that it doesn’t believe its insurance will fully cover the losses from the recent outbreak of looting and arson and expects further write-downs from this. The turnaround strategy at Game includes investment in new software, better customer service and more efficient e-commerce; indications are that these have not yet taken hold. COVID has also taken its toll on foot traffic. On the upside, Makro grew sales by +13.5% to R13.7bn, and Builders was up +24% to R7.2bn.

Comment: No one goes broke selling gumboots and bags of cement to South Africa’s weekend warriors, it seems.

A couple of weeks ago we mentioned in an offhand way that Massmart’s Game was closing its operations in “West and East Africa”, two vast and not even necessarily contiguous regions. Let’s get a little more specific shall we: Massmart is divesting itself of five Games in Nigeria, four in Ghana, two in Kenya and one each in Tanzania and Uganda. The business will be represented in Kenya by a single Builders store in Nairobi. Interestingly, Shoprite has also said it will be divesting more of its East African stores – namely its five branches in Uganda and 10 in Madagascar. This leaves it without a single store in the region, having sold its Tanzanian assets to Nakumatt in 2014, and exited the Kenyan market in early 2021. Both businesses have given currency devaluations, high inflation and lower commodity prices as the reasons for their retreat from the regions in question.

Comment: This, to us, looks like a lose-lose scenario. There is no doubt that these markets would benefit from the vibrance and value of modern retail in some suitable form or another. And our retailers, constrained and consolidated at home, need somewhere to grow.

Further evidence, if more were needed, that Walmart remains committed to its investment in Massmart came this week with the news that the Big Feller is springing a not insubstantial $11.34m over the next two years for payments to Genpact, a financial service provider to Massmart. Genpact is a multinational professional services firm that does back-end office work for many Fortune 500 companies, and was hired by the Men in Black in January to do tax stuff and account payments. Walmart’s generosity will take some of the cashflow burden off Massmart for the next couple of years as its strategy of consolidation and cost-cutting kicks in and it returns once more to profitability. The retention of Genpact seems to follow an outsourcing trend followed since the arrival of Mitch Slape – Massmart’s IT software support is now handled by a Walmart-owned call centre in India.

Comment: Massmart has not been the bargain Walmart had hoped. But nobody can say they aren’t giving it a proper go.

Makro recorded a +40% increase in online sales during the year we had no choice but to call 2020. Game was up +77% over the same period, while Builders grew a mind-blowing +111%, begging the previously unthinkable question: is the bakkie as we know it becoming obsolete? Now in the ‘21, Makro has decided to invest in becoming a major force in online retail locally, and a potential rival to Takealot. What’s it got going for it? First, the infrastructure: Makro’s 23 stores are ready, willing and able to be full service DCs for online ordering, and a pickup service is successfully running at four of them. Second, the people, like Sylvester John, ex-vice president for last mile delivery in Walmart’s North American division, who now leads Massmart’s e-commerce team. Thirdly, delivery: its partnership with Wumdrop gives the business the benefit of a crowdsourcing solution and the ability to grow direct deliveries to customers, improving lead times and efficiencies – their words not ours. So what’s left? The front end. In this regard, Massmart is revamping its website to offer Walmart-like ease and efficiency to the South African punter. It’s also adopting a mobile-first strategy, underpinned by its status as an anchor tenant on Vodacom’s forthcoming super app.

Comment: Exciting stuff. If there’s an existing South African retailer with the range and the reach to take on Takealot, Makro is probably it.

A trading update from Massmart, who always seems to spring these things on us at odd intervals. Sales up +8% to R30.5bn for the 19 weeks through 9 May, with sales in South African stores increasing an even healthier +10.1% to R27.9bn, and sales outside of South Africa declining by around the same. The growth in South Africa came despite an estimated YoY decline in liquor sales of R770m. Makro grew sales +16.6% despite pressure on the food business as a result of a struggling hospitality and service sector, while sales in the embattled cash and carry business declined marginally; sales at Cambridge were down -8.4%. Builders, though: sales up a barnstorming +39.4% to R4.9bn (remember, though, that Builders lost most of April last year, but still…). And all of this against last year’s results, where Group sales were down -7.7% for the year through December.

Comment: All of this points to a Massmart recovery, which seems set to accelerate as underperforming assets and inefficiencies are removed from the equation.

While not exactly the jewel in the Massmart crown – that would probably be Makro – Game is working gamely (Really? Ed.) to remain relevant and deliver innovation in a rapidly shifting retail landscape. To this end, it’s putting considerable resources into growing online sales, revamping its mobile app, beefing up its third-party delivery partner network, and helping punters easily find what they’re looking for online. 70% of shoppers access Game’s website via the app, which was not initially designed as an end-to-end shopping experience. Enter COVID, and with it an increase of +70% in online sales last year. How to meet demand? Omnichannel. “We want to create multiple platforms that will, for example, enable customers to engage and shop via the app, the WhatsApp engagement channel or via our call centres, and for all platforms to work seamlessly together,” explains Game e-commerce and digital VP Paris Philippou.

Comment: Massmart has seen some troubled times these few years past. But it remains one of Africa’s largest retailers, and seems to be tightening its offering to bring the punters what they want, when they want it.

As we reported a couple weeks back, Massmart will shortly be disposing of its Cambridge and Rhino retail operations, as standalone food is not core to the business. They’re also disposing of their Massfresh offering, and now, we are told, are taking a long hard look at the rest of Africa, where the business is “under review”. According to Business Day’s irascible Chris Gilmour, this is usually shorthand for “going to be sold off or closed down.” He points out that if this were the case, it would leave the business with 22 Makros, 69 cash and carries, 120 Builders’ and 149 Games – a slim base indeed off which to launch the next phase of growth if such is planned. Unless, of course, that growth is virtual: online sales grew +58.6% to deliver R1.1bn in gross merchandising value across the business in the year through December, and Massmart is investing heavily in its e-commerce platforms to improve its distribution and support.

Comment: Massmart has tasted greatness before, and with the necessary disciplines in place, should eat of its fruits again.

A slow news week, so what better time to dive into Massmart’s arcane wrangling with SARS over who exactly carries the can for loses on an employee share option scheme. Follow closely now, it’s going to get tax-ing. (Oh, come on. Ed.) Turns out that 20 years ago, Massmart set up a trust through which it would channel share transactions for key management who were offered call options on Massmart shares that vested over the course of years. When the time came to settle up, the trust could buy shares on the JSE, allowing the participants to cash out their shares, something 90% of them apparently chose to do. But the devil, you see, was in the details: Massmart would ‘loan’ cash to the trust that was never intended to be repaid, and (OK we’re lost) when Massmart exercised its right to have the trust use this cash to buy the shares, a capital gains loss would somehow result, according to Massmart. To which SARS has responded, “nice try sunshine”, leaving Massmart in the can for taxes on almost a billion South African rands it had hoped to claim as a write-off.

Comment: Or something. Moral of the story is, don’t.

So the final Massmart numbers are in for the year through December 2020, and things went pretty much as advertised in the recent trading update: total sales down -7.7% to R86.5bn, with a net loss of R1.8bn, with write-downs of R798.7m, mainly related to its Cambridge and Fruitspot businesses, and foreign exchange losses of R381.1m. On the upside, the business managed to reduce operating expenses, and delivered a trading profit of R1.17bn, up +5.5% from last year. What’s the plan? “We are also now moving beyond our turnaround imperative to align the Group portfolio to our strategic objective to prioritise investment in core and high-returning trading assets,” said the business, in a statement which translates to “close underperforming stores”. Accordingly, it is looking into the disposal of its Cambridge Food, Rhino and Massfresh assets.

Comment: As Massmart closes underperforming stores and business units, it opens up further space for the resurgent independents. Ongoing support being brought in from Walmart in the form of resources (including a R4bn loan facility), programmes and expertise will hopefully help defend its market share.

Even as Massmart beats a strategic withdrawal from some of its retail assets, including Cambridge Food, it is staking out some other real estate critical to its growth (cue dystopian dubstep, dramatic pause) … Cyberspace. Massmart’s Makro and Builder’s brands will be ‘anchor tenants’, if you will, on Vodacom’s new “super app”, to be launched mid-year, on which punters will be able to shop online, stream music, pay bills, send cash to friends, buy insurance and even borrow money via their mobile phone. Game will be added later. This will give Massmart a captive market of 44 million Vodacom subscribers – a lot more punters than the business currently reaches. “We believe that we would get a lot more younger, tech-savvy customers to come to us,” avers Massmart COO Richard Inskip. Massmart recently launched products with OneCart and UberEats to expand its reach and plans to introduce its own shopping apps.

Comment: Promising stuff for a business which has endured some hard years.

Massmart intends to close another 14 stores under the Browns & Weirs and Jumbo brands in its Masscash division, after the sale of eight last year to Devland (with another three possibly to come), all as part of its turnaround strategy. At the end of the 2019 financial year, the business had 130 Masscash stores, which contributed around a third of the Group’s R93.7bn in sales but generated a trading loss of R385.4m. Massmart also joined the stampede of trading updates last week: Group sales were -7.7% lower for the year through 27 December, at R86.5bn, although it anticipates that trading profit will be 3 to 8% up on last year. Net loss, though, different story: Massmart is anticipating it to widen by as much as 36% from R1.3bn in 2019, because of write-downs of R798m, including to its Cambridge Food and Fruitspot businesses. The turnaround plan remains in full swing, however, with a three-year cost saving target of R1.9bn.

Comment: Heckuva time for a turnaround strategy. This will be feather in Mitch Slape’s cap if he pulls it off.

Massmart have been keeping something of a low profile of late but have popped their heads over the parapet to deliver a breathless trading update for the 52 weeks through to 27 December 2020. Total sales were down -7.7% to R86.5bn YoY, with like store sales down -7.5%. South African sales were down -7.9%, with sales in the rest of Africa slightly better at -5.4%. Sales lost due to COVID, say the Men in Black, were estimated at around R5.7bn. Fourth quarter sales were more promising, coming in at -4.1% under the same period last year. Liquor sales have been something of a wash under the draconian restrictions on that category. For readers of a financial bent, Massmart has announced that it will be entering a management services agreement with Genpact covering financial transaction processing activities. Genpact are a strategic partner of Walmart.

Comment: It will be interesting to see, when the financials come out, what profits Massmart has managed to extract from these numbers.

Big new Massmart DC at Brackenfell in the Western Cape underway. Let’s have a peek under the old bonnet, shall we? Over to you, Tyrone Kleinjan, development manager for the project: “The Massmart DC boasts a beautiful, high, curved and seamless roof – which measures over 60,000 square metres – making it one of the largest single roof surfaces in Cape Town,” he extols. “The most important element in warehouse design is the shape of the roof, and the Massmart DC has a continuous roof sheet system to minimise any potential weak points where water can enter the building.” Roof aside, it’s all green: inverter-type aircon for -25% less power, rainwater harvesting, LED lighting and motion sensors to keep them off when they’re not needed, water-wise plants, you name it. The facility covers an impressive 53,000 squares and should be up and running by September next.

Comment: Bold. Massmart have not been without their troubles the past couple years, but clearly, they are here to stay.

We generally devote a line here or a line there to news of executive appointments among our retailers, unless the appointment points to a larger shift in the strategy or fortunes of the business concerned. And thus it is now: with the appointment of Theodore Sylvester John, recently Walmart’s North America vice-president for last-mile delivery, to lead the e-commerce business. “We have placed high priority on investing in, and improving, our e-commerce competence,” says fellow US transplant and CEO Mitch Slape. “To achieve this, we are extremely lucky to be able to draw on Walmart’s extensive knowledge and experience (and) Sylvester’s assignment is further evidence of their support.” Massmart has indeed gone all-in on the omni-channel and e-commerce business, having got a head start on click-and-collect and beefing up last-mile with the acquisition of Wumdrop in 2017.

Comment: Walmart’s involvement seems to go above and beyond the mere protection of an investment. If you ask us, it’s playing a long game on the African continent, with Massmart as the bridgehead.

Game and Makro will be running their Black Friday deals throughout November to capitalise on that global festival of affordable gizmos while maintaining COVID-19 protocols. “Black Friday traditionally sees high concentrations of shoppers in retail stores across the country, which can create a challenging shopping environment,” explains Massmart Corporate Affairs Executive Brian Leroni. Deals will be staggered throughout the month, with new discounts announced each week, and running only for that week, maintaining the heady sense of urgency for which Black Friday is adored. Sneak previews of the deals – including big-ticket items such as large appliances, electronics, home living items and of course televisions – will be provided on Massmart’s social media.

Comment: We’re a little on the fence about the long-term value of Black Friday to South African households. But certainly, Massmart are taking an innovative and strategic approach to the retail event this year.

Mitch Slape is putting his money where his mouth is to the tune of 8 million something South African rand, or 300,000 Massmart shares, which he’s purchased either as a truly epic PR stunt or because he believes his turnaround of the business is solidly on track, probably the latter we surmise. He’s made some pretty decisive moves since taking the reins: simplified the business into two divisions, taken fresh produce off the menu at Game, outsourced IT support to Walmart’s Indian operation, paid out R46m in severance packages to reduce staff costs, and shut down DionWired, just for starters. While the business lost R1.2bn this financial, profit margin, a good measure of efficiency, was up just shy of a percent for the period. He’ll also apparently be looking at the profitability of operations in Africa (read: more cuts). It seems that the punters are willing to back the horse that Mitch rode in on too: while the share has lost -44% in this horrible year, it was up almost 4% by close last week.

Comment: Go big or go home. Fortunately, it seems that Mitch has decided to stick around.

Is Walmart really super-committed to its investment in Massmart? Mitch Slape is tired of you asking. “I really look forward to the day when that’s not a question anymore,” he says, pointing to the R4bn Daddy Walbucks lent Massmart in June should it need the extra cash to get over the worst of COVID. And to the talent he’s bringing in to help things along – talent which now includes Walmart veteran Martin Halle, out of Argentina, as VP in charge of Massmart’s supply chain, an area in which he has a particular talent. All of this emerged at the interims presentation last week, at which it was also announced that sales were down -9.7% for the half-year through June, despite a double-digit growth in online, and that the business had turned in a R1.2bn loss, substantially due to closing costs for DionWired. For a closer look at the numbers, click here.

Comment: Rampant at home in the US, Walmart has energy and cash to burn for the Massmart turnaround. We do hope it works.

Sad news this week from Game, which is in negotiations with organised labour for the cutting of as many as 1,800 staff from the payroll, a measure aimed at improving efficiencies as part of its ongoing efforts to restructure the underperforming unit. Other measures include dropping the fresh and frozen food category, and introducing a line of basic apparel, including t-shirts. Game’s restructuring is part of a broader effort which includes moving Makro into the new wholesale division, the shuttering of all of DionWired’s 23 stores and as-yet-unidentified moves across the business including, apparently, at head office. The process is lent urgency by the COVID-19 crisis, which has seen a decline in sales at the already-troubled retail giant: revenue for the 23 weeks through 7 June fell -10.3% YoY. And the share price is down at levels last seen in 2004.

Comment: Massmart is a vital part of South Africa’s dynamic trading landscape. It is to be hoped that the sometimes difficult restructuring returns them to profitable growth in due course.

Game is 50 years old, which for retail journalists of a certain age is an extremely sobering thought. Journalists who as a young lad walked the gloomy splendour of the first Brickhill Road store as their mother marvelled at the cheapness of everything, for example. Fifty years later, and the brand has 150 stores on the continent, success that the brand’s VP of marketing, Katherine Madley, attributes to flexibility. “As consumer behaviour has changed and evolved, the Game brand has undergone constant reforms and innovations to ensure it remains relevant in the minds of consumers and in line with their needs,” she explains. It’s this approach which has shepherded brand loyalists through seven recessions, and with the assistance of a 2019 brand refresh should see them through the current unpleasantness, positioning its deals and bundles as the perfect solution to their problems.

Comment: An icon of the trade. Veels geluk!

Massmart has approached the old man for a bit of help to get it over the COVID hump, to the tune of a R4bn inter-company loan from Walmart. This as it announced that sales for the 23-week period through 7 June totalled R34.8bn, -10.3% down from last year, with like-store sales down a similar amount, and sales in South Africa down -11.5%. The loan, says Massmart, will “provide additional headroom in the event of unforeseen circumstances as we navigate through the lockdown period and beyond.” Translation: the cash will help Massmart through a period of presumably temporary illiquidity, caused by the hit it has taken in sales during the pandemic. This hit included R2.3bn in liquor sales lost during the lockdown in April and May. The Men in Black also project that profits for the six months through June will be -50% down from the same period last year.

Comment: Nice to have a partner like Walmart to keep things flowing during a time like this.

Some moderately good news from Massmart at a time when the business could really use some. In a trading update they reported that sales for the quarter through March were up +1.3% YoY to R22bn, with like-store sales up a more muted +0.6%. This on the back of a terrible 2019, in which the business recorded its first ever loss of R861m in the face of deteriorating conditions for consumers and the underperformance of DionWired, now no more. Chair Kuseni Dlamini remains sanguine, however. “The board is confident that with a clear turnaround plan in place, driven by an experienced leadership team, Massmart’s prospects will improve,” he writes in a letter to shareholders. And indeed, the arrival of a decisive Mitch Slape seems to have got the ball rolling on a turnaround.

Comment: Although, through absolutely no fault of their own, the timing for this turnaround could be better.

Last Thursday, Massmart made the difficult call to cease trading at all 23 of its DionWired Stores, and – at the time of going to press – was still deliberating on the details of the closure of its 11 underperforming Masscash stores. Massmart are in discussions with unions on the mitigation of job losses, and on moving affected workers into vacancies at other stores “where practical and reasonable”. In total, 1,440 workers will be affected. DionWired, as you know, has fallen victim to lower spending on consumer electronics in these straitened times, and on the greater variety and advantageous pricing offered by online retail; in the year through December the Massdiscounters division suffered a R674.6m loss, having delivered a R32m profit the previous year.

Comment: A tough call, with a horrible human cost. But DionWired is hardly alone in this – across the globe, similar retailers are falling victim to the same inexorable forces.

In a gloomy results preso last Thursday, Massmart – which has never sugar-coated the bad news in our experience – let it be known that trading profit declined -46.3% to R1.11bn and operating profit (before forex, interest and tax) declined -55.0% to R852m, on sales that grew +3% to R93.7bn. Sales back home in the Beloved Country grew +2.7%, but elsewhere in Africa looked more promising at +6.4%. Food and liquor sales were up +5.1% to R53.5bn, home improvement grew +2.9% to R14.2bn, while general merchandise fell -1.3% to R25.9bn. Massdiscounters, encompassing Game and DionWired, recorded a trading loss of -R674.6m after a trading profit of R32.6m last year, explaining the urgent focus on that segment of the business. “2019 was a year of under-performance, it was a year of change, reset, and will help us reposition our business better,” says new guy Mitch Slape. “2020 will be a year of change and refocusing the business.” For more, read our one-page summary here.

Comment: There’s no margin for error in these tough economic conditions.

Telling it like it is this week would be Massmart’s New Guy Mitch Slape, who has put retail landlords on notice that they are, how should we put this, engaging in predatory escalatory practices vis-à-vis the rental, upping the price of square meterage at the rate of +6-7% per annum, at a time when inflation is close on half that and the economy crawling along at 1%. “Ridiculous” was the word the diplomatic Mr Slape used to describe. Right about now, every bit counts for Massmart, which is shortly to turn in a full-year loss of around 1.4bn ront. Massmart’s not the only one struggling with high rentals though – it seems that a number of retailers will be downsizing and rationalising their space, and this, inevitably, will lead to a decline in the rent, to the tune, say some experts, of -10%. In other Massmart news, the business is taking Game back to its roots, whipping out fresh fruit and veg and filling that space with inexpensive apparel.

Comment: Tough times, for Massmart, but it’s exciting to see so thorough an overhaul in progress.

Big news from Massmart at the shareholder’s hoedown last Thursday, where Mitch Slape announced that the business is to be reorganised from the existing four divisions into two more coherent business units: Wholesale and Retail, with Makro, Jumbo, Rhino Cash & Carry, Liquorland, Jumbo Shield, Saverite brands and Fruitspot falling under the former, and Builders, Game, DionWired and Cambridge Food under the latter. The realignment is part of a strategy which – according to Massmart – will improve capital deployment, unlock the synergies between trading brands and provide a sharper focus on the needs of both wholesale and retail customers. In effect, it marks the birth of a wholesale giant and an entire new route-to-market approach on the African continent, benefiting from Makro’s existing systems and processes. Despite the poor figures on display, with sales up just +3% to R93.7bn, and headline losses somewhere just shy of R1.2bn expected, punters clamoured for the share to the tune of a +6% rise on the reveal.

Comment: Exciting times. As we’ve noted before, we expect that the turnaround of this great South African business is going to be the big story of the year ’20.

Analysts – ourselves included – are rightly concerned about the impact of the coming closure of all 23 DionWired, and 11 Masscash stores on Massmart’s workforce – 1,440 jobs are likely to be lost. There is another group that could be affected though – better heeled, perhaps, but no less embattled. This would be the owners of South Arica’s shopping malls. Last year, you will recall, Edcon closed 150 stores; as the current economy puts the retail sector under further pressure, more retailers could be looking to downscale with the closure of underperforming locations, which is bad news for property owners. DionWired has suffered badly from the rise of online retail, which sees shoppers trying products in store before buying them more cheaply from sites like Takealot. A more rapidly executed omni-channel strategy and an earlier trimming of floor space may have saved the brand, say experts. The only people happy with the move, it seems, are shareholders, who rewarded Massmart with a 5% hike on the news.

Comment: In an environment like this, the travails of Massmart are unsurprising, and will no doubt give other retailers pause for reflection.

Seems like some difficult decisions are being made over at Massmart, where as many as 34 DionWired and Masscash stores face closure, at the possible cost to the business of 1,440 jobs. This as part of a store optimisation project, which has revealed some of the underperformers in the Group and which will no doubt go some way to returning the business to the sort of profitability deemed acceptable by shareholders. The business has commenced a potential store closure consultation with organised labour and other stakeholders. In other Massmart news, a technical glitch saw some Makros closing for the morning last Thursday; normal service was promptly restored.

Comment: This is going to be a year of close scrutiny for Massmart under the new-broom stewardship of turnaround artist Mitch Slape. Pretty sure there’ll be better news to tell when Auld Lang Syne rings in our ears once more.

Bowing to the inevitable replacement of all other communications systems in the world by WhatsApp, Makro have announced that punters will now be able to experience instant customer care and service by connecting with them directly on the ubiquitous application. Services on offer include tracking orders, viewing current catalogues, accessing a digital store card, locating nearby stores, and having frequently asked questions (FAQs) instantly answered in the chat function. “The addition and implementation of exciting functions in WhatsApp aligns with Makro’s mission to help our customers fulfil their aspirations of living better lives, running better businesses, and saving them time and money,” said Makro’s head of digital marketing Kerry Ho.

Comment: Meet your customer where they are, that’s how it’s done. And (probably) save a bob or two while you’re about it.

“So how’s the new feller shaping up?” you enquire. Pretty good so far, would be the measured response. New Massmart CEO Mitch Slape certainly gets about, anyway, conducting unannounced weekly store walkabouts and parking-lot town halls with head office staff that are shared with the rest of the Group. He’s starting to embed a culture of cost control, with an “every rand matters” campaign to sensitise employees to decisions they make every day. He is also looking at instituting Group-wide negotiations on a number of different levels, and reducing rental where possible. The online retail offering is another priority, particularly clarifying Massmart’s approach to food. And finally, he plans on deepening the relationship with the business where he cut his teeth. “I think there’s a tremendous opportunity for us to really supercharge this business with a closer relationship with Walmart in doing a lot of things I know Walmart does incredibly well,” he says.

Comment: Exciting times for the Men in Black. Especially for those managers not expecting the store visit on an idle Friday.

No word yet on how the new chap’s working out, but an interesting piece of news this week is that members of Walmart’s Global Sourcing team have been in the Beloved Country this week having a word with 18 Massmart suppliers who have global ambitions. This as part of Massmart’s Supplier Development initiative, which has just past its R1bn procurement mark, and which got CEO of Walmart International Judith McKenna all excited when then- Minister of Economic Development Ebrahim Patel mentioned it to her at Davos last year. The 18 suppliers in question produce everything from dried fruit to gardening tools. Global Sourcing is represented in 27 countries around the world, with a mandate to review products and ensure they match Walmart standards.

Comment: There is much to be admired in the Massmart business. Their Supplier Development Programme is up there with the best of it.

The analysts are all of a twitter (and not the kind you read on your phone) this week, with the arrival of Mitch ‘The Fixer’ Slape from Walmart. They all have some ideas for him. “Cut costs,” says Petri Redelinghuys of Herenya Capital Advisors, pointing out that across the Group expenses were up by close to a billion. “Fix Game,” chorus Cassie Treurnicht of Gryphon Asset Management and Stephán Engelbrecht of Anchor Capital. “The stores look dated,” says the former, and “food seems like more of a hassle than its worth,” says the latter. “Build a proper online retailer,” argues Schalk Louw, portfolio manager at PSG Old Oak. Woolies grew online locally +30% last year, Massmart shrunk it -14% due to third-party issues, and in the meantime, Takealot is going gangbusters. Ron Kiplin of Cratos Wealth isn’t afraid to go one further: “It looks like Slape is going to change Massmart’s fortunes by major cost-cutting,” he boldly predicts, “Possibly rebranding the company and a potential selling of non-core assets. He might even make the Group more focused on the Walmart format, by doing things the Walmart way.”

Comment: Attaboy Mitch. No shortage of sound advice, if you know where to look. Hint: everywhere.

You know it’s going to be bad when they bring in load shedding. And so it roved with Massmart, whose sales grew +5.5% to R43.8bn for the six months through June, but whose costs outstripped those, for a net loss of R832.4m. “Cash-strapped consumers continue to spend proportionately more on our sales promotion activities which causes further gross margin pressure,” they said in an accompanying statement, and also pointed to general elections in two African countries where they trade, depressed GDP growth back home, and yes, load shedding. Outgoing CEO Guy Hayward also acknowledged “various internal missteps”, without specifying the precise nature of these. Throwing a bone to the punters, Massmart mentioned that sales tended to skew more heavily to the back half of the year where Black Friday and Christmas feature prominently. For Ti’s summary of the results, click here..

Comment: Tough times for Massmart indeed. Our sincere hope is that now the only way is up.

Ok, now we now know more about getting a South African work visa if you’re a globetrotting CEO than we had ever hoped to. It turns out that has been the delay for Mitchell Slape, who in order to work in this haven of law and order has had to obtain police clearances for all of the other countries he’s worked in, including India, Japan, Mexico, China, Argentina and the US. His arrival couldn’t come too quickly for the retailer, which as documented last week, has conducted something of a purge of senior management – or alternatively suffered a spate of resignations – at a couple of its underperforming divisions. An anonymous analyst has said that he expects that Slape is going to move through the business like a dose of salts, and that a major change in direction should be expected, but that any turnaround – which may involve a major overhaul of the portfolio – could take two years or more.

Comment: Tough times right now, but this is going to be one of the big stories of the next two years.

A grave trading update from the Men In Black, who have let it be known that they are expecting losses of between R530 to R550m for the six months through June once the final reckoning is done, having achieved headline earnings around R204m last year. This on the back of losses totalling between R395 and R425m over at the troubled Massdiscounters division, where there has been a staffing shakeup, with Albert Voogd out as CEO, Andrew Stein in as interim, Riaan Turton as FD and Kathrine Madley and Neville Hatfield as marketing and merchandising directors respectively. The Masscash division is likely to report a trading loss of between R180m and R210m, blaming like Massdiscounters a downturn at the lower end of the market. CEO Kevin Vyvyan-Day is handing the reins over to Deepa Sita as interim. Group wide, say Massmart “much of the lower profitability is caused by the soft sales, margin pressure from the lower sales participation of general merchandise and expense growth caused partly by the new Makro store opened in Durban North in March.”

Comment: Troubling stuff. We look forward to the turnaround of which we know this great South African business to be more than capable.

It seems that the Wakro experiment, as we waggishly used to call it, is not over. Well, we knew that: the appointment of Walmart’s ‘fixer’, Mitch Slape, to the top job at Massmart sends a strong message, and it’s one that some analysts at least are apparently pricking up their ears and listening to. They point to Massmart’s intention to build 47 new stores between 2019 and 2021, mostly in Kenya and Zambia as a mark not of declining confidence in the home market, but as a bullish investment in geographies with higher economic growth and minimal penetration of formal retail, that are also a good fit for some of Massmart’s big box formats. Some have also suggested that with the Massmart share price down 60% since the initial acquisition, Walmart might be considering going all in and buying out the minority shareholders.

Comment: A story still in the making. We look forward to its next exciting chapter.

Walmart are proving surprisingly chatty about their plans for Massmart, having, as you know, named a “fixer” from within their own ranks, Mitch Slape, to succeed Guy Hayward as CEO. Speaking at a Deutsche Bank-sponsored global consumer conference, Richard Mayfield, CFO of Walmart International, shared some of the thinking. “I think the first job is to trade the business well, but clearly, we’ll be reviewing the portfolio of businesses and the operating model. I think there is a lot of opportunity for efficiency and cost savings.” Much work has been done in the Massmart business on these themes over the past two to three years. The savings to which Mayfield refers are related to the often overlooked goods not for resale (GNFR), which can push costs up by +25%, and include consumables such as shopping bags and till slips, equipment like fridges and services such as IT support – areas where, in other words, the economies of scale possessed by a Walmart might come in handy.

Comment: The past two to three years at Massmart have been defined by a significant amount of ‘back-end’ work, focusing on cost control, organisational re-structure, streamlining supply chain infrastructure for margin and efficiency etc. We look forward to seeing the impact of this work and new leadership on the numbers – a strong Massmart business is a strong vote for our economy and FMCG industry.

As a mark of their continued interest in Massmart’s fortunes, and perhaps as a vote of confidence in this troubled economy of ours, Walmart are dispatching one of their own, Walmart Japan CEO Mitchell Slape, to take the reins post the December 2019 exit of Guy Hayward. This suggests that the Big Feller is going to become more involved in the control of day-to-day operations, and even, some analysts suggest, that Walmart might be looking to take full control of the Group. This despite the declining share price, which has seen Walmart lose around 80% of the value of its initial investment. Or perhaps because of it: the other 49% of the business could now justifiably be considered a bargain if a turnaround is in the offing. Slape, who is an old Walmart hand, has served the group in Mexico and in India as COO. In Japan, he was in part responsible for the turnaround of the ailing Seiyu chain. If his experience there is anything to go by, store revamps and the growth of online are likely to be on the cards.

Comment: A development we will be watching with considerable interest. A strong Massmart business is a strong vote for our economy and FMCG industry.

The analysts have been having a field day with the resignation of Guy Hayward as CEO over at Massmart, as they do, taking this as an opportunity to weigh in on Walmart, the economy, and even the tenure of Mark Lamberti, two CEOs ago. It’s generally, if not universally, considered that Mr Hayward was handed a tough job when he took over in 2014, after 14 solid years of growth for the retail sector, and just before things went belly up for just about everyone. Some kinder prognosticators noted that under his tenure the organisation has made significant strides in the areas of efficiency and organisational structure consolidation, and on Walmart, the sharp-suited ones were divided, with some suggesting that had the Competition Commission allowed The Big Feller its full 100% of the business, Walmart might have had free rein to run things according to their own terms and we’d be looking at a different story right now. Others, pointing to Walmart’s less than impressive performances in Brazil and the UK, say thank goodness it was only 51%.

Comment: Can fingers be confidently pointed right now? We hold judgement in anticipation of the potential positive impact that the efficiencies and consolidation could bring going forward.

The big news from the Men in Black this week is that one of their lead numbers is to hang up the ceremonial suit: CEO, Guy Hayward will be leaving the business come December 2019. “Guy has guided Massmart through exceedingly challenging market conditions and has worked to position the business for future growth,” says an official communique from the business, which points to the value-added services and shared group logistics services introduced and competitive online offerings in Makro, Game and Builders Warehouse implemented on his watch. We at the Trade Tatler wish Guy well and look forward to seeing the impact of these significant developments in organisational structure, online and VAS on the Group’s operational efficiencies and profit performance going forward. Although there is no word as yet as to Guy’s successor, on the CFO front, taking over from Johannes van Lierop will be Mohammed Abdool-Samad from Illovo – the company that is; we have no idea where he lives. In other Massmart news, the newly-minted Builders Warehouse in Boksburg is a showcase for the future of the brand, with roving payment devices, 3D printing facilities and from a style and selection perspective, a more woman-friendly environment.

Comment: Big news re Mr Hayward; more will surely follow in the days to come.

Yes, we know, we covered the Massmart results a few weeks ago. But with Massmart being the most diversified of South Africa’s major retailers, a closer look is perhaps instructive for other businesses struggling under the current economic climate. Massdiscounters, of course, was a wash, with sales down -1.2% to R19.7bn and trading profit 91%, to R32.6m, on the back of the yet-to-be-proven move of head office to Joburg. Massbuild, generally a reliable source of both sales and profits, saw its bottom line flatten under depressed consumer demand. Masswarehouse – that’s Makro and Fruitspot to most – grew sales +5.4% to R28.8bn, but trading profit fell -12.4% to R1.1bn, in the face of high costs growth of +9.2%, and stock control challenges off the back of the strong move to fresh produce, with unexpected additional stock losses for which 20 people including managers were given their marching orders. Some good news from Masscash (Rhino, Jumbo and Cambridge), where comparable sales grew +2.1% to R28.7bn, and comparable trading profit +48.4% to R188.6m, on good expense management and what we trust is the beginning of the ship turning for the division that competes most strongly with the powerful independent wholesale and retail trade.

Comment: At a time like this, control of expenses through efficiencies is (almost) everything.

Here we are at the bitter end of what has been a bruising results season for almost everyone. The Men in Black have proved no exception, with sales up +2.9% to R90.9bn for the year through December, but trading profit down -16.8% to R2.1bn. Massmart has of course been up against the same conditions which have plagued the rest of the industry – slack economic growth, the VAT increase, unemployment, deflation in food and durable goods, and higher fuel prices – but has also had to absorb some R161m in restructuring costs, particularly related to the move of Game’s head office to Gauteng. Game itself has underperformed, with sales in the Massdiscounters unit declining from R20bn to R19.7bn, as traditional supermarkets muscled in on Game’s stronghold in GM, while Game failed to return the compliment in Food. On the upside, the business has plans for 47 store openings across the Group, including the promising geographies of Kenya and Zambia, and the tiny kingdom of Cornubia, where Makro’s largest KZN store is soon to open.

Comment: Tough times, but Massmart are not sugar coating it, and have the grit and, it seems, the strategy to come back swinging.