Sales update!

Yesterday we received a trading update for the 44 week period up to 2 November from Massmart which looked solid. Why 44 weeks? It coincides with the analyst store visit. Lets look at the numbers.


Total sales increased to R62.5bn which is up 10.4% over the period. Comparable store sales increased 7.3% while prices increased 4.9%. Massdiscounters which includes the Game brand increased sales by 8.9%. Game is their preferred brand to expand into Africa. The rest Africa division slowed slightly, no extra details were given.


Masswarehouse (Makro) increased sales by 11.5% while Massbuild increased sales by 14.7%. These are Massmarts strongest divisions as they target the higher end consumers. As you can see they are proving to be very resilient. Masscash which targets the lower end consumer with cheap grocery products grew sales by 8.9% with inflation of 4.9%.


These are decent numbers coming through and they are maintaining the growth seen for the first half of the year of 10.2%. Massmart have grown solidly on their 26 week sales figure of R35.7bn to R62.5bn in 18 weeks. We still have the strong month of December to come.


What does this tell us? It tell us that the South African consumer has normalised to the recent price increases. We are probably seeing some extra spending from the anticipation of potential price decreases from likes of petrol as commodity prices come down. This is of course great for the consumer and great for the retailers and the producers. Tiger Brands is trading at all time highs.

As for the business itself, we are keeping a close eye on operations. We are starting to get impatient with the Massmart brand base, especially their focus on Game. The strong set of numbers we see here is being experienced across the retail board. The Shoprite update indicated a 12.3% growth in sales. We believe there are better options out there at the moment such as Woolworths. The Massmart share price has shown some recent strength on the back of these numbers. If you would like to take advantage of the stronger Massmart price give us a call to make a swap, either into Woolworths or if you already own those, Mediclinic.