For the 26 weeks ended 23 June 2013, Massmart’s total sales increased by 8.9% over the prior comparable period (being the 26 weeks to June 2012) while comparable sales increased by 5.5%. This level of comparable sales growth was inadequate to cover expense growth and consequently Group operating profit, excluding foreign exchange movements, was 1.0% below last year’s equivalent figure. A large positive swing in foreign exchange movements however, caused headline earnings to increase by 51.9%. Excluding foreign exchange, headline earnings declined by 9.4%.

Period-weighted product inflation was 2.9% reflecting positive sales volume growth for the Group. As noted in our regular sales updates, the Group’s sales growth slowed throughout the period. There seems to be a clear pattern in the South African economy that whilst all income groups are under some form of spending pressure, this becomes more severe as one moves down income levels. Our lower-income brands have therefore done worse than our higher-income brands. Cash utilised in operations improved to R0.6 billion in the period (June 2012: utilised R0.9 billion). Most of management’s focus is on maintaining market shares and reducing costs. The remainder of our focus is in implementing our Strategic Priorities.