Covid-19 and alcohol sales ban hit Massmart foot traffic
JOHANNESBURG - MASSMART yesterday reported a 7.7 percent decline in sales to R86.5 billion during the 52 weeks ended December, compared to a year earlier.
The group said comparable store sales fell 7.5 percent as the Covid-19 pandemic put further pressure on consumer spending. Massmart, which owns the Makro, Game and Builders Warehouse brands, said despite the lifting of trading restrictions, the reinstatement of the alcohol ban in December impacted liquor trading.
The retailer painted a bleak picture, charging that sales from the South African stores had slumped 7.9 percent and comparable stores eased 7.6 percent, while sales from the Africa division decreased 5.4 percent and comparable stores 6.6 percent. The group said foot traffic and sales were muted, albeit with stronger sales performance in home improvement and DIY categories.
Total fourth quarter sales also fell 4.1 percent to R25.6bn, with comparable store sales decreasing by 3.6 percent and representing a slight improvement in the trajectory of second half sales, which ended with a decrease of 5.9 percent over the same period last year, with comparable store sales decreasing by 5.6 percent. “The economic impact of the pandemic on consumer spending was evidenced by a general reduction in foot traffic, particularly in regional shopping malls, impacting sales in many merchandise categories during the fourth quarter,” said Massmart.
Massmart said that trading during the fourth quarter saw many of the previously imposed Covid-19 restrictions lifted, which allowed trading to resume in most categories. “Liquor trading, however, continued to be impacted by the limitations on trading hours as well as the reinstated trading restrictions as announced by the government in mid-December,” said the group.
On December 28, President Cyril Ramaphosa, announced that South Africa would go into level 3 lockdown to curb the high rate of Covid-19 infections, prohibiting the sale and transportation of alcohol. Massmart said that the Black Friday trading period was softer for the retail sector compared to a year earlier.
“The company’s extension of Black Friday promotions throughout the month of November did mitigate the impact of softer Black Friday weekend sales to some extent,” said Massmart.
The overhaul saw the closure of 34 persistently under-performing DionWired and Masscash stores that had no clear prospects for improvement.
Massmart has also reset Game stores in an attempt to return them to profitability by phasing out fresh and frozen food, as well as music and movies categories and introducing essential clothing.
BUSINESS REPORT ONLINE