Massmart sales update

Yesterday Massmart came out with a sales update for the 46 weeks, the reason for the weird timing is due to an analyst road show, to have a look at a couple of their stores. Here is an extract from the SENS announcement.


"Massdiscounters increased by 7.9% (2.5% comparable) with inflation of 0.5%;

Masswarehouse increased by 14.0% (4.8% comparable) with inflation of 2.3%;

Massbuild increased by 9.9% (8.5% comparable) with inflation of 4.1%; and

Masscash increased by 4.1% (3.5% comparable) with inflation of 4.5%."


To give you an idea of how each of those divisions fit into the company, here is a group breakdown with each divisions pre-tax profit, their respective store square meterage and then main brands.

Massdiscounters - R813 million; 415,816 m2; Game and Dionwired

Masswarehouse - R906.3 million; 146,026 m2; Makro

Massbuild - R435 million; 406,987 m2; Builders Warehouse, Builders Express and Builders trade depot

Masscash - R302 million; 382,101 m2; Jumbo and Shield



The first thing that stood out to me with the figures is, how profitable Makro is, it has the biggest profit with the least floor space. I'm sure that my family's wine drinking has a contributing factor to that, because I when I think Makro, I think wine and not all the Tv's and big ticket items that they actually sell.


More importantly, is the 9.9% growth in Massbuild's sales because it shows that people are starting to build more, which you can only do when you have spare cash, or if you are feeling confident about the future. These figures are just confirming the reports of the green shoots being seen around the world, so good for them and good news for us.

The worrying figure from the group is that Masscash grew sales by less than inflation, this is probably due to them have a large amount of their sales in food to the lowest LSM groups. Food inflation has been high and inflation hurts the poor more than the rich, meaning that when prices go up, the poor just buy less, where for higher income groups they normally just absorb the increase.


As far as the company goes, they are well positioned to take advantage of the economic recovery and the move of more people into the middle class.