South Africa’s Massmart Holdings has indicated that it is in talks over its intention of closing 34 stores, which could lead to the loss of up to 1,440 jobs.
Massmart Holdings owns stores including Game, Makro, Builders Warehouse, Dion Wired, Jumbo and Liquorland. US retail giant Walmart is the company’s majority shareholder.
According to the company, a “store optimisation project that highlighted a number of underperforming stores” is the reason for the potential closures.
Massmart has been in trouble for some time.
It said in February 2019 its headline earnings fell 31.7% to R901.2 million in the 52 weeks to December 30.
Massmart said the combination of low sales growth and higher expense growth caused group trading profit excluding foreign exchange movements, interest, and restructuring costs to decline by 16.8% to R2.1 billion.
It said this was against the backdrop of a difficult economic environment, characterised by low economic and wage growth as well as constrained consumer confidence.
“Notwithstanding the difficult environment, Massmart maintained strong market share across durable goods categories including; small and large domestic appliances, hi-tech, and most DIY (do it yourself) and hardware categories,” it said.
Total sales from the group’s South African stores – which generate 91.3% of sales – grew by 2.9% compared with 1.5% for comparable store sales. Total sales from stores outside South Africa grew by 3.9% in constant currencies.
The company was focused on those factors within its control, given a challenging operating environment.