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South Africa: Annual Results – Massmart’s Turnaround Programme Starts to Pay Off

south africa annual results massmarts turnaround programme starts to pay off
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Massmart’s shares rallied 21% after it announced it was disposing of more non-core assets as its turnaround programme starts to gain traction.

Massmart plans to ditch more of its less profitable businesses as it focuses on those that it believes have market-leading positions, including general merchandise, DIY, wholesale food and liquor.

While DIY served it well last year, with just a small decline in sales and a decent improvement in trading profit at its Builders chain, its liquor business didn’t deliver because of alcohol bans during the lockdown, which contributed to an estimated R6.1-billion in lost sales for the year.

Under CEO Mitchell Slape, who was parachuted in by parent company Walmart towards the end of 2019, the group has separated its business into distinct retail and wholesale units as part of its turnaround strategy, grouping Game and Builders into the former and its Makro and Masscash stores into the latter. It has already closed its 23 Dion Wired stores and has earmarked 11 Masscash stores for sale, while Game is being given a facelift, exiting fresh food and launching clothing.

It has now appointed banking group Barclays to sell its interest in Cambridge Food, Rhino and Massfresh. While it…