Massmart laments bad trading phase

Massmart, which is 51%owned by US giant Walmart, is battling one of the worst retail environments it has yet seen in SA, chair Kuseni Dlamini says.

Massmart, which is 51%-owned by US giant Walmart, is battling one of the worst retail environments it has seen in SA, says Massmart chair Kuseni Dlamini.

On the sidelines of the African Investment Forum last week, Dlamini said the SA market accounts for 91.6% of Massmart’s total sales.

Since Walmart acquired its majority stake on June 20 2011, Massmart has lost about 24% of its share price value.

“We need the economy to grow, we need more jobs to be created, we need more consumer confidence, we need more investor confidence in our country and we need to attract investment,” Dlamini said.

SA fell into a recession in the first two quarters of 2018. The retail sector, which was also in a recession in the first half of the year, is an important indicator of consumer spending, which accounts for 60% of GDP.

“That we’re in a recession has to be a wake-up call for leaders to step up to the plate… It’s a rallying cry for leaders to do more,” said Dlamini.

Retailers have also felt the pinch of the first VAT rate increase in 25 years, announced in the February budget, which came into effect on April 1.

“That was really a factor if you look at the sales in the second quarter of this year [2018],” said Dlamini, adding that the increase had also been a burden to consumers, already under pressure with static disposable incomes and an unemployment rate edging towards 30%.

To grow the economy, SA should identify the quick wins, including lifting the visa requirements, reforming the labour environment and sending out the right message around land expropriation without compensation, said Dlamini.

“These are issues that are very urgent and some of them have not been managed very well, and in the process we have done what is almost tantamount to scoring an own goal in local and international investor circles ,” he said.

“There’s a huge opportunity cost to the country in terms of investments… A lot of investors are waiting in the wings to see how these matters are resolved. We need to have absolute clarity and absolute certainty.”