For the 6 month period ending 26 June 2022, Massmart expects a loss between R1.05 billion and R1.16 billion, which is a year-on-year change ranging from a 3.5% improvement to a 6.5% decline. The company has said that their operations have continued to suffer a sales impact by damage caused during the rioting in July 2021.
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“Sales from continuing operations, which excludes Cambridge, Rhino and Massfresh, amounted to R38.1 billion, an increase of 1.9% over the prior year period,” Massmart stated. “Liquor sales performed strongly, with like-on-like sales on a continuing operations basis increasing by 21.3% over the same period last year. This reflects sales recovery in our Hospitality, Restaurant and Catering, and wholesale customer base.”
Earnings were heavily impacted by once-off lease exit settlement cost, increased finance costs has negatively impacted earnings and lower margins. Two other material items also hit the bottom line. A once-off negotiated R184 million lease exit settlement cost relating to the Riverhorse Distribution Centre destroyed in the July civil unrest. Also, increased finance costs attributable to a higher opening net debt balance compared to the prior year, also as a direct consequence of the impact of the July civil unrest.
“While sales have recovered on a like-for-like basis compared to the same period last year, softer General Merchandise sales have negatively impacted sales contribution in this margin accretive category,” it said. “Margin pressure has further been negatively impacted by cost inflation outpacing sales inflation and lower margins in Builders resulting from increased trade sales associated with recovery in the construction sector.”
“Pleasingly, the opening net debt balance gap has closed materially,” reported Massmart. “In addition to the above, the Group has received the second interim payment of R270 million relating to the Business Interruption Insurance claim, stemming from the civil unrest in July 2021, bringing the total Business Interruption Insurance recoveries received to date to R370 million.”
