Massmart is disposing of all its general merchandise Game stores in West and East Africa as the Walmart majority-owned retailer evaluates its portfolio on the continent, its CEO said on Friday.
Like its peer Shoprite Holdings, forays into African markets including Nigeria have been marred by currency volatility and constrained consumer demand, making it difficult to operate profitably on the continent once touted as the next bright growth spot for retailers.
As part of a turnaround plan, Massmart had said it will review its store portfolio outside of Southern Africa. That review has now resulted in the disposal of 14 stores across Ghana, Nigeria, Uganda, Kenya and Tanzania.
Massmart CEO Mitch Slape said in a media call he will elaborate on the review during the retailer’s results presentation later today.
Through the disposal of non-core food assets and the geographical store review, Massmart hopes to sharpen management’s focus and invest in high return assets and online.
Game sales from the rest of Africa stores fell by 18.6% in rand terms in the 26 weeks ended June, and by 5% in constant currencies, due to continued currency weaknesses, Massmart with presence in 12 African countries said.
The group is also revamping Game in order to return it into profitability. It reported a narrower trading loss of 347.3 million rand in the period, however the distractions from the restructuring and constrained foot traffic in many super and regional malls and shopping centres saw sales fall 8.7%.
Massmart also narrowed its total headline loss by 40.8% to 645.4 million rand ($43.4 million), helped by higher sales despite fresh COVID-19 restrictions and amid signs that its turnaround strategy continues to pay off.
Massmart’s total sales rose 4.4% to 41.3 billion rand, while it swung to a trading profit of 444.2 million rand, supported by expense control and strong profit before interest and tax increases at Builders and at its wholesale division.