Massmart expects to post a R1.05-billion to R1.16-billion loss for the 26-week period that ended on 26 June 2022.
This represents a year-on-year change ranging from a 3.5% improvement to a 6.5% decline.
Excluding its Cambridge, Rhino, and Massfresh operations that it has sold to Shoprite, the company expects its losses to be between R880 million and R959 million — a year-on-year decline of 11.3% to 21.3%.
Massmart said South African store sales continued to be impacted by damage caused during the July 2021 civil unrest and remained flat.
“Sales from continuing operations, which excludes Cambridge, Rhino and Massfresh, amounted to R38.1 billion, an increase of 1.9% over the prior year period,” Massmart stated.
“Liquor sales performed strongly, with like-on-like sales on a continuing operations basis increasing by 21.3% over the same period last year,” the company said.
“This reflects sales recovery in our Hospitality, Restaurant and Catering, and wholesale customer base.”
Massmart said a combination of lower margin, once-off lease exit settlement cost, and increased finance costs has negatively impacted earnings.
“While sales have recovered on a like-for-like basis compared to the same period last year, softer General Merchandise sales have negatively impacted sales contribution in this margin accretive category,” it said.
“Margin pressure has further been negatively impacted by cost inflation outpacing sales inflation and lower margins in Builders resulting from increased trade sales associated with recovery in the construction sector.”
The company said its trading result was also negatively impacted by two other material items:
- A once-off negotiated R184 million lease exit settlement cost relating to the Riverhorse Distribution Centre destroyed in the July civil unrest.
- Increased finance costs attributable to a higher opening net debt balance compared to the prior year, also as a direct consequence of the impact of the July civil unrest.
“Pleasingly, the opening net debt balance gap has closed materially,” reported Massmart.
“In addition to the above, the Group has received the second interim payment of R270 million relating to the Business Interruption Insurance claim, stemming from the civil unrest in July 2021, bringing the total Business Interruption Insurance recoveries received to date to R370 million.”
Massmart said it continues to work with insurers to conclude the claim and final payment before the end of the year.
Massmart’s financial results for the 26-week period to 26 June 2022 will be released on 29 August 2022.