South Africa's Massmart Forecasts Annual Loss, Plans To Reorganise Business
South Africa's Massmart Holdings has forecasted a loss for the full-year as it battled tough trading conditions in the second half and said it will reorganise four of its businesses into two divisions.
Massmart, majority owned by U.S. retail giant Walmart , expects to report headline loss per share, excluding the impact of adopting accounting standard IFRS 16, between 342.9 cents and 384.5 cents for the year ended December 29.
It reported annual headline earnings per share of 416.5 cents last year. Headline EPS is the main profit measure in South Africa and strips out certain one-off items.
Massmart said it would simplify its operations by reorganising its wholesale, warehouse, hardware and discount store businesses into two divisions, wholesale and retail. The company's total sales rose 3% to 93.7 billion rand ($6.54 billion) in the 52-week period ended Dec. 29, helped by growth outside South Africa as the continent's most advanced economy shrank for the second time in three quarters last year.
Massmart also expects to take an impairment charge between 200 million rand (€12.4 million) and 250 million rand (€15.5 million) before tax.
The company said earlier this month that it could cut up to 1,440 jobs under a plan to close some stores as it struggles to grow sales.
A number of Massmart's rivals, such as Shoprite, have struggled in difficult market conditions and currency weakness elsewhere in Africa, especially Zimbabwe and Nigeria.
Cash-strapped shoppers continue to prioritise food over durables, resulting in lower sales of high-margin goods and higher sales in the lower margin food and liquor categories.
Massmart is expected to release its full-year financial results on February 27.