× Digital News Videos Health & Science Opinion Education Columnists Lifestyle Cartoons Moi Cabinets Kibaki Cabinets Arts & Culture Podcasts E-Paper Tributes Lifestyle & Entertainment Nairobian Entertainment Eve Woman TV Stations KTN Home KTN News BTV KTN Farmers TV Radio Stations Radio Maisha Spice FM Vybez Radio Enterprise VAS E-Learning Digger Classified Jobs Games Crosswords Sudoku The Standard Group Corporate Contact Us Rate Card Vacancies DCX O.M Portal Corporate Email RMS
×

Massmart to focus Africa expansion plans on Kenya, Zambia

NEWS
By Reuters | March 1st 2019
New Massmart stores are set to open in Kenya and Zambia. [Photo: Courtesy]

JOHANNESBURG,- Massmart Holdings Ltd , one of South Africa’s biggest retailers, plans to add 47 new stores between 2019 and 2021, with about a third of the new space outside its home market.

The company, majority-owned by Walmart Inc, set out its expansion plans on Thursday along with annual results, where the retailer reported a 31.7 percent fall in full-year earnings, sending its shares down sharply.

South African retailers have expanded aggressively outside their domestic market where growth has stagnated due to the weak economy.

But this has also brought problems. Nigeria and Angola, for example, have had currency devaluations, which have hit South Africa’s Shoprite Holdings, highlighting the challenges of doing business in frontier African markets.

Massmart, which has 47 stores in 12 African countries, said its latest expansion plan would be concentrated specifically in Kenya and Zambia.

“Zambia and East Africa are interesting to us because they’re not totally dependent on mineral resources like West Africa is,” Group Chief Executive Guy Hayward told Reuters.

“Kenya and Zambia have quite strong tourism industries and little bit of local industries so the economic play there is a bit more robust.”

Massmart, which sells general merchandise, fresh food, groceries, home improvements and appliances, plans to open a Builders Warehouse in Nairobi, Kenya in October, Hayward said. Four stores, including the Builders Warehouse, will be opened in Kenya and five in Zambia. Builders Warehouse is Massmart’s building materials and appliances chain.

Hayward said his Africa strategy was about going “slowly and carefully.” He said the company was still committed to Nigeria, where it has 5 stores.

On South Africa, Massmart said it was cautious about the outlook for the local consumer economy for the first-half of 2019.

South African retailers have struggled to lift earnings and sales to double digits as an increase in value-added tax, unemployment and inflation, coupled with higher fuel prices have reduced consumers’ spending power. Massmart generates 91.3 percent of its group sales in South Africa.

Massmart’s shares plunged 15 percent in early trade on Thursday after its headline earnings, which include restructuring costs, fell to 901.2 million rand ($64.70 million) for the 52 weeks ended Dec. 30, hit by lower sales, rising costs and one-offs.

Sales for the seven weeks to Feb.17, 2019 were at 11.2 billion rand ($800.88 million), representing total sales growth of 5.2 percent and comparable sales growth of 3.9 percent.

“We’re encouraged by that, but the readings that we’re getting about the economy are negative and muted and so are very cautious about the next six-months,” Hayward said.

Share this story
Tesla’s record loses: What is going on inside Elon's electric emporium
Tesla has single-handedly made electric cars cool - and got the rest of the auto industry to sit up and take notice.
Restoring Nairobi’s iconic libraries
Book Bunk is turning public libraries into what they call ‘Palaces for The People' while introducing technology in every aspect.

.
RECOMMENDED NEWS

;
Feedback