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.