Walmart will stick it out
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