Black Friday makes R1 billion for Massmart and the Cyril ramaphosa factor

This is an important moment for South Africa in terms of reinvigorating our own social, economic and political progress and we are keen to contribute to this positive passage of growth and renewal

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Retailing group Massmart recorded another bumper Black Friday with over R1bn in sales and improved margin management from the 2017 Black Friday edition.

But even that was not enough to save Massmart from harsh market conditions which saw its sales growing by only 1% during the 2017 financial year. The group which operates through names like; Game, Makro, Dion-Wired, Builders Warehouse, Cambridge and Rhino; saw headline earnings increased by 1.6% to R1.3 billion.

Massmart CEO Guy Hayward said: “Very weak consumer confidence resulted in lower demand for durable goods, significant deflation in most major commodities impacted the wholesale business and we were negatively affected by generally weaker African economies and currencies.”

“While these headline figures are indicative of the exceedingly difficult consumer environment that persisted in the period, they mask a much-improved performance in the second half of 2017,” said Hayward.

The second half performance was partly influenced by Black Friday bumpers sales. An Amercan concept of slashing prices a day before the Thanks Giving holiday, Black Friday has taken off in a big way in South Africa.

The Black Friday take off is partly pushed by a scramble for market share in a tightening and difficult market. Major retailers like Shoprite, Checkers, Woolworths, Pick n Pay are hopping into it.

Massmart notes that the constrained consumer environment had a significant impact on the durable goods sales (General Merchandise and Home Improvement categories). The group also noted that “we are pleased that we continued to increase market share in durable departments including major appliances, audio-visual, information technology and gaming. This market share growth ensures Massmart is well positioned for an upturn in the consumer environment.”

It highlighted pleasing growth in Food & Liquor sales “with many food and grocery categories growing ahead of the market, including; convenience instant meals, cereals, snacks and carbonated drinks.”

The outlook isn’t bad, thanks to the Cyril Ramaphosa factor. Hayward said “The 2017 consumer environment presented a number of challenges for retailers. However, we are excited about the political changes we have seen since the ANC conference in December and we look forward to an improvement in many of the economic factors that have created headwinds, particularly for durable goods retailers.

“The work we have done on enhancing our operational efficiencies, reducing the cost of execution and refining our product mix means we are well positioned to take advantage of a cyclical upturn. Nonetheless, the structural, policy and public sector impediments remain long-term challenges through which our Food & Liquor offerings will provide a defensive positioning.

“This is an important moment for South Africa in terms of reinvigorating our own social, economic and political progress and we are keen to contribute to this positive passage of growth and renewal”.

news@ujuh.co.za

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