sales update for the 14 weeks to 3 October

One of our long recommended stocks, but basically a company that will fall aside when swallowed by Walmart, is Massmart. Or will they, more below this piece on sales. It is not even strange that they chose a similar sounding name. Massmart have a "state of the consumer" sales update for the 14 weeks to 3 October. Huh? Well guys, it is in the annual report, so they might as well make it known to the market. So, here goes:



"For the 14 weeks to 3 October 2010, total sales increased by 14.9% and comparable sales increased by 9.2%, continuing the trends experienced for most of the second half of the 2010 financial year, specifically strong General Merchandise and Home Improvement trading performances." Nice. But before you get too excited there is the African business impacted by a firmer currency (everyone makes too much of that) and the food business that is still struggling as that division continues to experience deflation. Good for the consumer, not good for sales.



And then an earnings guidance of sorts: "Acknowledging the concerns and uncertainty permeating the global economy, if current South African economic and trading trends continue for the financial year, Massmart should achieve profit growth, before any foreign exchange translation adjustments, ahead of sales growth for the full year." Excellent. So you can read into that one way, that the first half of this year will be much better than the first half of last year. Remember in our results analysis of Massmart we carried the following table, suggesting that the second half had been much better than the first half.

Encouraging 2nd half performance

That is what I mean. Quite encouraging I guess. What is less encouraging however is the fact that WalMart might actually leave the entity listed, and have a part take out of sorts. Massmart that is.




Here is the official release: "....Walmart has notified the Company that, after having consulted with major Massmart shareholders and key South African stakeholders regarding the Proposed Offer, Walmart is investigating potential options for and the merits of retaining Massmart's listing on the exchange operated by JSE Limited. These investigations could lead to Walmart making a partial offer to acquire in excess of 50% of the entire issued share capital of the Company for a cash price of ZAR148 per share..."



We continue to contact our Massmart holders and discuss the issue.