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Massmart could cut 1 440 jobs

Following a review that identified a number of underperforming outlets.
The move marks the first significant act by Massmart’s new CEO, Mitchell Slape. Image: Moneyweb

Massmart could cut up to 1 440 jobs under a plan to close some stores, the retailer said on Monday, as it struggles to grow sales in a tough economy.

Massmart, majority owned by US retail giant Walmart, swung to its first half-year trading loss in two decades last August, as low growth, high unemployment and a rising cost of living hurt South Africans’ spending power.

The retailer said in a statement it had started consultations with unions and other stakeholders around the closure of several stores, following a review that identified a number of outlets that were underperforming.

“A total of 34 Dion-Wired and Masscash stores and approximately 1 440 employees are potentially affected by this process,” it said.

Dion-Wired is Massmart’s electronics and appliances subsidiary, while Masscash is its wholesale division including cash and carry, food and cosmetics outlets.

Massmart, which also owns Game and Makro, cut its full-year dividend by 40% last year and scrapped its interim dividend. The stock has more than halved in value over the past 12 months, the worst performer of the 13 stocks on the FTSE/JSE Africa General Retailers Index.

Massmart shares, which sunk to a 13-year low last year after the retailer issued a profit warning, were up 5.33% to R51.41 by mid-afternoon yesterday.

A Massmart  spokesman said the [store-closure] process may take at least two months.

The move marks the first significant act by Massmart’s new chief executive officer, Mitchell Slape, who arrived from Walmart in September with a brief to turn around the retailer. 

A number of Massmart’s rivals, such as Shoprite, are also struggling in the difficult market conditions, and both retailers have also had to battle currency weakness elsewhere in Africa, especially Zimbabwe and Nigeria.

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COMMENTS   27

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…and in all this economic carnage, the reserve bank is rumoured to be planning to keep the interest rates unchanged… The will be more blood in the streets.

True but we also don’t want our Rand to free fall like most currencies on the African continent… 50/50…

The interest rate should rise.

How would lowering the interest rate stimulate the economy considering consumers are already drowning in debt?

… I wonder hey!

Fiddling with interest rates would be wound dressing at this point. What South Africa needs is strong pro-business policy immediately, however what we are seeing is precisely the opposite. The ruling party year after year embraces more anti-business and communist values. Precisely the opposite of what they should be doing.

Interest rates are a (blunt) tool to overcome cyclical challenges. SA’s problems are not cyclical, our main trading partners are coming to the end of a strong run but are not in recession. SA’s challenges are structurual.

Massmart has also been terribly managed since Mark Lamberti left and the addition of groceries in a half hearted attempt to replicate Walmart in SA was a strategic disaster.

Lower interest rates will not adress these macro and micro issues.

Walmart: “Dress up the pig and sell it”.

Dion Wired stores have great merchandise but probably to expensive for most South Africans… e.g. toasters between R2k and R10k…

Strange that they don’t foresee any staff cuts at Game Stores. Watching the grass grow on my lawn is more exciting than the merchandise at Game stores…

There’s a Game and a Dion in the mall I go to. So far Game has managed to get a lot of traffic. Their prices are good and there lots of people buying there, in spite of the tired store design, the exhausted and disinterested staff, and the sometimes very poor quality products – there’s cashflow at least.

Dions on the other hand is quiet. There’s more going on in a cemetery. Walk into a Dions and you are 1 of about 5 customers in the store. Can’t see that they will last very long.

It been long coming. DionWired is way too expensive (yes it does carry premium products), but Makro is now carrying most of those products. Next will be Game (the elephant in the room)

Mitch is here to cut the fat, and when he’s done with his mission – only Makro, Builders will remain

“Let them eat cake” – Marie-Antoinette

“We will provide free housing, electricity, water, education, NHI……and jobs” – the ANC

Both terrible statements, so I’m confused about your point here.

Marie-Antoinette represented the ruling elite, so does the ANC.
Both quotes shows the absolute, destructive ignorance of the person or institution that expressed it. Marie-Antoinette was so out of touch with her environment, and so is the ANC. The masses dealt with her, as they will deal with the ANC.

“Honourable Comrade Stalin, is there a Soviet government law stating that villagers should go hungry? Because we, collective farm workers, have not had a slice of bread in our farm since January 1… How can we build a socialist people’s economy when we are condemned to starving to death, as the harvest is still four months away? What did we die for on the battlefields? To go hungry, to see our children die in pangs of hunger?” – Ukranian Farmer

Replace Stalin with Luthuli House.

That part of history was no doubt omitted from the syllabi of our previously exiled “comrade learners” during the dark apartheid times. In fact I suspect very few people today know about that genocide committed by Stalin. The US universities are awash with cultural marxism and socialism has been rebranded as progressivism, and actively peddled by Sanders and his “Democratic” hangers-on.

The street confirms how bad the SA economy really is.

There is only so much money going around. The fact that a new store opened around the corner doesn’t mean we are all going to spend more money. All that happens is that we are slicing the money cake in smaller pieces. But the size of the cake stays the same.

This is all because of foreign business entering the country such as Chinese, Somalian retailers.. most people prefer buying cheap appliances from Chinese retailers.. even groceries is being made from Somalian and Pakistan containers in township.. they cheap and have no tax when buying, no transport fees.. they have affected employment rates and sa economy.

No, my friend, you are wrong. If you want the real reason for the record-high, and rising, unemployment rate, don’t look at the foreigners, look at yourself in the mirror, and at your neighbour through your window. This mayhem is entirely self-inflicted. Democracy offered people the opportunity to transform their life-experience to resemble their mindsets, and they embraced it. Now, after the consequences of their actions become evident, they blame it on the Somalis? No man!

do not forget the made in germany mercedes,bmw,audi,coffee,chocolates,
soaps floooding the markets…methinks they have affected employment far,far,far more.

How have they affected employment? VW and BMW employ and educate huge numbers of people in South Africa. From manufacturing, sales, servicing etc. And you think South Africa are in the position to manufacture equally good motor vehicles?
You think SA is in the position to manufacture quality chocolate and coffee? I don’t. I think the import and warehousing of those goods is the best we can offer in term of quality and employment prospects.

The whole world are buying those products. Who’s economy is suffering apart from ours?

Methinks the only way they have affected the economy in SA, is positively… Unless you were being facetious? In which case, excuse me. I’m so used to people coming up with absurd rethoric in SA that is completely contrary to fact but thinking it’s the truth.

A friend closed 24 out of 25 stores in major retail centers across South Africa in the last 5/6yrs as business has plummeted. In each instance he cited that rentals were killing them and centre owners were unsympathetic across the board.

To save jobs in retail, start at the greedy centre owners.

Take that train of thought all the way back to the extortive cost of electricity, plus the redistributive municipal rates and taxes policy. Both are the results of socialist government policies. This is how the average voter destroys his own job opportunities. Karma is a bitch my brother.

During a spell of load shedding about 8 – 10 yrs ago I was traversing over Northcliff hill and looked down at Cresta centre roof top and thought wouldnt that space be just great full of solar panels. Instead they were investing in a multi story car park and parking system to charge shoppers more.

Now they have to give away parking for 3hrs as the foot traffic has declined. Same with the Glenn.

Karma is a bitch my brother.

well said Eric.

South Africans are getting poorer.Made in China has improved its
quality so much that south africans generally cannot afford it any more.

End of comments.

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