South Africa’s Massmart continued to expand its flagship Game and Builders Warehouses into Africa, CEO Grant Pattison revealed on Thursday morning.
“Both formats (warehouses) have approved several new sites in existing African markets. Game sites have also been approved in Angola and Kenya, both of which are new markets for Massmart,” Pattison said without naming other countries.
Additionally, Pattison said the Supplier Development Fund, which increased from R100 million ($11.3 million) to R240 million ($27 million) following the ruling set down by the Competition Appeal Court, was already operational.
After their merger, US Walmart and Massmart, offered an investment answer that would have seen them splurge R100 million ($11.3 million) over three years on the fund. The labour movement protested to the union, asking the fused entity to bind itself to a fund worth R500 million ($57 million).
This fund was seen as a pre-requisite for the endorsement of Massmart’s union with US’s Walmart. Walmart acquired 51 percent of Massmart for $2.4 billion a couple of years back.
The court had asked for an adept report on how such a development fund could assist small, micro and medium-sized enterprises to become part of Walmart’s global and domestic supply chains.
Pattison said: “And we’ve already made significant progress in creating opportunities for local suppliers of wine, paint and chemical manufacture, and fresh produce. The first harvest from our direct farm programme has already delivered more than 500 tons of fresh produce to our stores,” Pattison said.
“Our black-owned wine brands initiative has proved a success and has included listing the Bayede! and Seven Sisters wine brands in Walmart operations in China and the United States.”
The performance of Xchem, a manufacturer of adhesives and sealants, and Kurhula Paints had exceeded expectations. Xchem products were set to be rolled out in Gauteng after a successful five-store trial in Pretoria.
“We have doubled our order of paint from Kurhula who had previously never had the opportunity to supply the formal retail market,” Pattison said. Late last year, the Competition Appeal Court called for Massmart to pay R200 million to what it called a “supplier development fund” over five years.
Meanwhile, the second largest supplier of consumer goods in Africa posted a 14 percent leap in total sales to R36.1 million in the six months to end December last year, it was also announced on Thursday.
Headline earnings surged 6 percent while operating profits gained 6.1 percent. This was after all adjustments for foreign exchange movement and Walmart transaction costs had been made.
Massmart maintained the dividend constant with the prior year, adjusting for the change in dividend tax legislation. A gross final cash dividend of 275 cents per share, was declared.
Grant Pattison, Massmart CEO, said the legal aspects of the Walmart transaction and the integration activities were complete.
“And we are now more focussed on improving our operations and implementing our strategic agenda. Our key strategic focus is on ‘saving you money, so you can live better’ and becoming Africa’s most trusted retailer,” Pattison said, adding that value extracted from integration would be invested in price, for the benefit of consumers.
