Overview

For the 26 weeks ended 23 December 2012, Massmart’s total sales increased by 14.7% over the prior comparative period, while operating profit and headline earnings declined by 17.7% and 21.2% respectively. Excluding costs relating to the Walmart transaction and integration, which include the additional
R140 million related to the Competition Appeal Court ruling, and foreign exchange movements, operating profit increased by 6.1% and headline earnings by 5.8%.

Comparable sales increased by 7.3% and period-weighted product inflation was 3.7% reflecting positive volume growth for the Group. There was evidence of slower growth amongst middle- and lower-income customers towards the end of the period.

Massbuild and Masscash performed well, growing profit ahead of sales growth; Masswarehouse increased profits, although at a rate below sales growth, as they absorbed the opening costs of two new Makro stores; and Massdiscounters’ profits declined as comparable sales increased by only 2.6%.

Cash flow from operations was strong at R2.8 billion, although the Group is slightly over-stocked due to the sales slow-down in Massdiscounters.

With the Walmart transaction and integration now behind us, the Group is focused on operational disciplines, strategic implementation and extracting returns from the investments made over the past several years in Supply Chain and Food Retail.