Massmart is closing eight Game locations in South Africa, as parent Walmart looks to quietly tighten U.S. operations both inside and outside its main company.
This article is based on corporate postings and accredited media reports. Linked information within this article is attributed to the following outlets: Wikipedia.org, News24.com, TalkBusiness.net, Pymnts.com, and Google.com.
Wikipedia features a comprehensive overview of the majority Walmart-owned (since 2011) Massmart entity founded in 1990: Massmart Holdings Limited (JSE: MSM) is a South African firm that owns local brands such as Game, Makro, Builder's Warehouse and CBW. It is the second-largest distributor of consumer goods in Africa, the largest retailer of general merchandise, liquor and home improvement equipment and wholesaler of basic foods. As of 31 July 2022, Massmart operated 412 stores in South Africa and 12 other Sub-Saharan countries. Its head offices are in the Massmart House in Sandton, Johannesburg.
An archived August, 2019 article from TalkBusiness.net, “Walmart Losses in Africa Continue, New Leadership Working on Turnaround,” reported on Massmart’s business challenges: Walmart’s 51% stake in South African retailer Massmart continues to disappoint as the retailer forecast more lower-than-expected earnings across all four of its divisions for the six months ended June 30. Massmart will officially report six-month earnings on Aug. 29, but the retailer said losses are expected to widen despite comp sales growth of 3.6%, with inflation being 2.7% of that gain.
The article proved prescient, and Massmart’s challenges have continued. The issue has since become how such losses will impact domestic Walmart investors and the U.S.-based superchain itself.
Let us explore further.
Walmart and MassMart, 2022
According to a News24.com piece published earlier today, “Eight Game Stores Are Closing, With 700 Jobs Under Threat,” Massmart’s large holding has become its primary loss leader: We are still in discussions with staff to finalise closure dates," a spokesperson said. "As is always the case, we will apply our best efforts to identify opportunities for redeployment of the affected staff members within the broader Massmart Group." Game has been a thorn in the side for Massmart, being the major contributor to the company's loss of more than R900 million in just six months to end-June. At its results presentation last month, the company said it wanted to "divest" from 14 Game stores in east and west Africa, as well as 15 Game stores in South Africa.
The article added: At the end of last year, it identified 13 local stores that were "underperforming [and] non-core", of which eight will now be closed.
With the benefit of hindsight, in March of this year Pymnts.com put consistent Massmart losses into a broader perspective. In “Walmart-Owned Massmart Reports $290M+ Loss, Turns To Growing eCommerce Business,” the article stated, per Massmart CEO Mitchell Slape: To accelerate those plans, the JSE-listed company said it plans to leverage Walmart’s global eCommerce technology stack and has approved a three-year eCommerce investment plan that, among other things, will be mainly geared toward creating a seamless, mobile-first online shopping experience for consumers. “We are rapidly deploying financial and people resources, with eCommerce technological assistance from Walmart, to take full advantage of the market opportunities before us,” Slape said in the report.
As with Walmart domestically, online shopping has become a key sales tool. Earlier today, NewsBreak published my article, “Leaked Memo Exposes Major Change to Walmart,” which addressed this program and recent changes thereof.
Walmart will continue to tweak its business model based on various factors including overseas performance and consumer indicators among them. In terms of overseas holdings, everything influences the whole, including non-domestic losses.
Analysts, as a targeted Google search will verify, are closely scrutinizing overseas actions and widely expect domestic repercussions to balance the losses.
Walmart remains, in terms of most financial metrics, the globe’s most successful multinational conglomerate. As such, losses in all sectors impact the whole.
Should Walmart’s overseas losses continue to impact its U.S. investors and earnings, I will post updates here, on NewsBreak, as they happen.
Thank you for reading.