Wal­mart will stick it out

CityPress - - Business -

Wal­mart is keep­ing the faith for now, de­spite the value of its Mass­mart stake hav­ing dwin­dled.

Doug McMil­lon, Wal­mart CEO, said that the world’s largest re­tail com­pany was “very happy” with its 51% stake in Mass­mart, which has stores in South Africa and 12 other sub-Saharan coun­tries.

“We have a lot of op­ti­mism about our fu­ture. We have a strong man­age­ment team. We have ter­rific brands and store for­mats. I en­joyed be­ing here this week,” he said on the side­lines of the Consumer Goods Fo­rum in Cape Town.

McMil­lon’s com­ments come amid spec­u­la­tion that Wal­mart might dis­in­vest from its stake in Mass­mart, which owns Game, Dion­Wired, Builders Ware­house and Makro.

When Wal­mart, which has a mar­ket value of $221 bil­lion, bought its stake in Mass­mart in 2011, that stake was worth $2.4 bil­lion. By this week, the value of that in­vest­ment had re­duced to less than $860 mil­lion – a 64% drop due to the com­bined ef­fect of the de­cline in Mass­mart’s share price and the sharp de­pre­ci­a­tion in the rand.

“We don’t think about cur­rency ad­just­ments as much as you might guess.

“We fo­cus on con­stant cur­rency op­er­a­tions,” McMil­lon said.

When Wal­mart bought into Mass­mart, the rand was at about R7 to the dol­lar. It was trad­ing at R15.21 to the dol­lar on Fri­day.

– Justin Brown

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