Despite a weak trading environment, leading South African retailers Massmart and Woolworths have reported robust sales and profit growth.
The Walmart-owned Massmart group saw its first half (26 weeks ended 26 June 2016) trading profit, excluding foreign exchange movements and interest, growing by 13.5%, boosted by “effective margin management and expense control”. Total sales increased 8.7% to 42.31bn Rand, while comparable sales for the period increased by 6.4%.
Commenting on the results, Massmart CEO, Guy Hayward said: “Consumers are delaying purchases, trading down and reducing spending on durable goods to support spending on semi- and non-durables. This has meant general merchandise sales have softened while food sales have been stronger.
“Our businesses focused on sourcing well-priced merchandise and formulating deals that offer our customers exceptional value, resulting in market share growth across all major categories.”
Meanwhile, Woolworths South Africa reported full year results which showed sales rising by 16.4% to 72.1bn Rand, despite “challenging trading environments” in both South Africa and Australia. Profits rose 8.9% with group saying its continued to gain market share in the grocery sector. Food sales grew by 11.9% with price movement of 6.7% and comparable stores sales growth of 5.7%.
However, the group said that trading conditions had become more competitive with the arrival of northern hemisphere retailers and increased promotional activity.