Massmart to seek rental relief

Walmart-owned Massmart is embarking on costsaving initiatives such as seeking rental relief after the coronavirus-led lockdown pummelled sales, the retailer said on Monday. Its cash-flow initiatives include negotiating rental reductions and improving “mutually beneficial terms with strategic suppliers”, the company said.

Walmart-owned Massmart is embarking on cost-saving initiatives such as seeking rental relief after the coronavirus-led lockdown pummelled sales, the retailer says.

Its cash-flow initiatives include negotiating rental reductions and improving “mutually beneficial terms with strategic suppliers”, the company said.

“Massmart has met all payment obligations throughout the lockdown period and has continued to pay all employees in full. We will continue to proactively work with all suppliers and stakeholders to manage our cash position,” it said.

The retailer, which owns Makro, Builders Warehouse and Game, has joined a slew of SA retailers looking for rental relief as a result of the lockdown trading restrictions. Massmart said it would tap the Property Industry Group for relief. The group is made up of the SA Council of Shopping Centres, the SA Property Owners Association and the SA Reit Associations.

It was formed with the intention of helping retailers by offering rental discounts or deferrals.

At the start of the lockdown on March 27, retailers of nonessential goods were not allowed to trade, including Massmart’s brands such as Builders Warehouse. They were authorised to do so later in April, with strict limitations.

For most of April, Massmart was unable to sell products that represent a significant portion of its offering, including general merchandise, home improvement products and liquor. The retailer said total sales for the 19 weeks to May 10 dropped almost 12% to R28.2bn, while comparable store sales dropped 12.1%. Sales for the SA operations plunged 13.1% to R25bn.

The group said it was concerned about the prolonged lockdown and the impact it will have on SA’s trading environment. “The intensified pressure resulting from extended Covid19 trading restrictions increased the daily focus on liquidity and cash-flow management.

“Massmart has a strong balance sheet and, based on our cash-flow forecasts, has sufficient cash facilities and resources to meet its obligations,” the company said.