Massmart Holdings turn focus on investments in core high-return business
South African retail company Massmart Holdings is contemplating an additional sale to generate $613 million over the next five years by expanding stores.
The firm, majorly owned by Walmart Inc, announced its sales expansion strategy after reporting a significant annual loss this week that dropped down its shares to more than 13%.
Massmart’s turnaround plan has come to an end with stemming losses in certain businesses while closing down underperforming stores, leading to cost control, and integrating its supply chain network.
Last year, the retailer shifted its focus from the turnaround plan to potential investments in core businesses and the one’s offering high returns.
So far, the retailer has struggled to shoot up sales and return the company to profit as a result of a compromised consumer demand and unsatisfactory performance of its Game chain.
Moreover, Covid-19 related restrictions, disruptions caused due to civil unrest, and store looting added to Massmart’s business performance challenges.
Speaking on the growth plans, Mitch Slape, CEO of Massmart, mentioned that the retailer is eyeing potential growth opportunities within various spaces including home improvement, general merchandise, liquor businesses, and wholesale food.
Speculations have it that nearly 72% of the firm’s 2022 capital expenditure will be dedicated to e-commerce or online retail and will expand its store footprint.
Massmart’s store footprint expansion will encompass its food & liquor wholesaler Makro, general merchandise operations and home improvement Builders chains.
Over the next five years, Massmart is aiming for a 50% rise in the number of Builders’ stores in South Africa which currently stands at 112, generating sales between $91.5 million and $156.8 million annually.
Meanwhile, Massmart plans to ramp up Makro stores by 25% from 22, for sales expansion between $326.8 million and $457.5 million.