Massmart's sales hit by South Africa's coronavirus lockdown

JOHANNESBURG, May 18 (Reuters) - South African retailer Massmart said on Monday sales in the 19 weeks to May 10 fell 11.9%, hit by a five-week coronavirus lockdown that prevented the company from selling most of its general merchandise, home improvement and liquor products.

Group sales for the 19 weeks ended May 10, when restrictions were partially lifted, fell to 28.2 billion rand ($1.53 billion) compared with the same period last year, Massmart, majority owned by Walmart said in a statement.

Comparable store sales were 12.1% lower than last year, with comparable sales from South African stores falling 13.2%. Sales in the rest of Africa edged up 1.3%.

In the 2019 financial year, general merchandise sales contributed 26% to overall sales, liquor 15% and home improvement 15%, Massmart said.

“Given the high level of contribution of these categories to total sales, April (lockdown) sales were significantly lower than would be the case under normal trading conditions,” the retailer said.

The owner of Makro and Game retail brands, which sell a range of products, including electronics and appliances, houseware, camping and outdoor equipment, was under pressure before the coronavirus hit South Africa as consumers cut back on discretionary spending on items such as appliances.

Under new chief executive Mitch Slape, Massmart announced a turnaround plan in January aimed at cutting costs and boosting sales and margins. Massmart is exiting poorly performing categories such as fresh and frozen food and has closed underperforming stores.

Present in 12 African countries, Massmart said because of the pressure from extended trading restrictions the company had increased its focus on liquidity and cash flow management.

This included initiatives to negotiate rental reductions and improved, mutually beneficial terms with strategic suppliers. The retailer is also reducing capital expenditure for the full year and pursuing cost reduction initiatives as already outlined in its turnaround plan, it said. ($1 = 18.3915 rand) (Reporting by Nqobile Dludla. Editing by Jane Merriman)