Massmart Divide and conquer
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.