Massmart suffers loss

File: Massmart has announced that it's consulting with unions and other stakeholders about closing as many as 34 stores. ​​​​​​​

File: Massmart has announced that it's consulting with unions and other stakeholders about closing as many as 34 stores.

Wikimedia Commons

JOHANNESBURG - Makro, Game and Builders Warehouse owner Massmart has suffered a headline loss of over R500-million for the six months ending in June.

The company has highlighted that cash-strapped consumers are only spending at Massmart stores during sales and promotions. The growing trend has put pressure on the company's profits.

Among other headwinds, the company blamed a 12 percent increase in costs for the loss.

This was due to higher salaries after the introduction of the minimum wage this year, as well as load-shedding and steeper municipal tariffs.

Massmart, which controls almost 40 percent of the local market for household appliances, saw slower sales of high-margin goods such as washing machines and flat-screen TVs.

Meanwhile, total alcohol sales jumped by almost 14 percent while durable goods sales only increased by 0.6 percent.

Earlier this year Massmart quoted FNB data that showed that 56 percent of middle-income consumers in South Africa spent their entire monthly salary in five days or less after receiving it.

Source
eNCA