Home improvement trend sees bumper sales at Massmart’s Builders Warehouse

Home improvement trend sees bumper sales at Massmart’s Builders Warehouse

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JOHANNESBURG – MASSMART yesterday recorded bumper sales at its Builders Warehouse stores during the 19 weeks to May 9, as demand for home improvement materials remained robust.

However, lower traffic volumes at shopping malls hit its Game outlets, as shoppers avoided malls because of Covid-19.

Massmart said sales at Builders were 39.4 percent better than in the previous year, at R4.9 billion, buoyed by the continued strong retail demand.

The group said trade sales continue to be muted, and Builders was restricted from trading for most of April last year.

“While most product categories in Builders have performed well, we especially see strong sales in paint, home improvement, garden and patio goods, indicative of consumers’ ongoing focus on investing in their living spaces,” Massmart said in a statement.

Total sales at Game took a 3.3 percent knock to R5.6bn compared to a year earlier, as consumers stayed away from shopping malls.

“Foot traffic in most super and regional malls remain depressed, as consumers prefer to avoid crowded indoor spaces in light of Covid-19 infection concerns. Consequently, given its relative high presence in these locations, Game has experienced pressure on sales,” said Massmart.

Makro recorded a 16.6 percent increase in sales over the prior year.

“While food sales are under pressure as a result of ongoing lower activity in the corporate, hospitality, restaurant and catering industry, liquor and general merchandise sales have performed well,” Massmart said.

Sales in the Cash & Carry business amounted to R6.7bn, marginally lower than in the same period last year, with similar challenges relating to food sales being experienced.

Total sales at Cambridge declined 8.4 percent to R2.7bn, indicating that customers in this segment of the market were mostly affected by the pressures of increased unemployment and lower disposable income.

Massmart generated R30.5bn in total group sales during the 19 weeks to May 9, up 8 percent compared to a year ago, on better improved trading conditions.

The South African store footprint recorded R27.9bn in sales, representing a 10.1 percent increase compared to the prior year, with comparable stores increasing by 10.7 percent, said the group.

However, the ban on alcohol sales in January and the Easter weekend would have an estimated impact of R770 million compared to a year earlier, mostly at Makro and the Cash & Carry business.

Commenting on the results, Euromonitor consultant Christele Chokossa said Massmart’s overall performance was likely to be supported by the easing of restrictions in 2021, particularly for segments that had been prohibited from operating fully from late March to May last year.

“From a business perspective, the group might benefit from recent restructuring, which aims at adding flexibility and reducing operating costs. Brands like Builders are also likely to continue benefiting from the momentum gained by DIY and home improvements,” Chokossa said.

“Nevertheless, the brand seems to also be affected by intensified competition and slow traffic in shopping centres where its stores are predominantly located. Such a trend has been emerging since the crisis erupted, putting additional pressure on outlets with limited penetration in convenience stores.”

Massmart said that total sales from its ex-South Africa stores amounted to R2.6bn, translating to a 10.1 percent decline in rand terms compared to same period last year, with comparable stores decreasing by 11.2 percent.

Massmart shares closed 1.02 percent lower at R61.01 on the JSE yesterday.

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