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Massmart posts slower rise in half-year earnings
Massmart increased its half-year earnings slightly, helped by cost cuts as cash-strapped shoppers spent warily. Diluted headline earnings per share at 149.3 cents. Sales growth, at 0.5 per cent, was slower than earnings growth. Massmart CEO Guy Hayward described the last six months as the most difficult trading conditions retailers have faced in recent memory. He said the challenging consumer environment demanded an intense focus on costs. He joins CNBC Africa for more.
Thu, 24 Aug 2017 10:36:03 GMT
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AI Generated Summary
- Massmart reports a slight increase in half-year earnings, driven by cost-cutting efforts amidst cautious consumer spending.
- The company is optimistic about potential economic indicators, such as low inflation and a stable rand, that could boost consumer confidence.
- Massmart focuses on strategic expansion, including an omnichannel approach, to adapt to changing consumer behaviors and drive growth in South Africa and Sub-Saharan Africa.
South Africa's retail giant, Massmart, has reported a slight increase in its half-year earnings, fueled by cost-cutting measures in the midst of cautious consumer spending. The company's diluted headline earnings per share stand at 149.3 cents, marking a marginal growth. However, the sales growth rate of 0.5% lags behind the earnings surge. Massmart CEO Guy Hayward acknowledged the tough trading conditions faced by retailers in recent months, describing it as one of the most challenging periods in memory. Despite the obstacles, Hayward remains cautiously optimistic about the future, citing potential green shoots in the economy such as low inflation, stable interest rates, and a relatively stronger rand against the dollar. These factors could potentially uplift consumer sentiment, albeit modestly. Hayward emphasized the importance of maintaining a tight grip on expenses to navigate the current economic landscape. While the company has made strides in increasing market share in sectors like appliances and DIY, it continues to face uncertainties that could impact future earnings. Massmart is strategically positioning itself to adapt to evolving consumer behaviors, particularly the growing trend of online shopping. By embracing an omnichannel approach, the company aims to offer customers a seamless shopping experience, whether in-store or online. In response to the industry-wide trend of job cuts, Hayward highlighted Massmart's commitment to avoiding layoffs by implementing a 'no replacement' policy for departing staff. The company relies on natural attrition and optimized staffing schedules to manage costs effectively without compromising on workforce stability. Additionally, Hayward shed light on the ongoing legal battles concerning exclusive lease agreements in malls, a contentious issue that is currently under scrutiny by competition authorities. Despite the challenges, Massmart remains focused on driving growth to deliver value to its shareholders. The company's growth strategy includes expanding its footprint in South Africa through the introduction of more food and fresh stores, bolstering its online presence, and tapping into the promising market of Sub-Saharan Africa. Hayward revealed plans to increase retail space by 20% in African regions over the next two years, with a keen focus on introducing popular brands like Game and Builders Warehouse. As Massmart eyes new opportunities for expansion, the company is poised for an exciting phase of growth and diversification in the competitive retail landscape.
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