Mitch Slape makes R8.18m investment in Massmart

Move seen as a vote of confidence by the group’s most senior exec.
Walmart veteran Mitchell Slape has been CEO of Massmart since last September. Image: Moneyweb

With Massmart’s share price still trading at around half its value compared to a 2020 peak of just over R59 in February, the group’s American CEO Mitch Slape is effectively taking a personal R8.18 million bet on turning around the loss-making retail and wholesale giant.

Massmart, which owns the Game, Makro, Builders Warehouse and Cambridge Foods chains, confirmed in a JSE Sens statement on Wednesday that Slape had purchased 300 000 ordinary shares in the group.

The shares were purchased in an on-market trade at a weighted average price of R27.29 a share by the Slape Family Trust, which is incorporated in the US. Slape is a director and beneficiary of the trust.

The move represents a significant vote of confidence in Massmart by its most senior executive, who officially took over as CEO just over a year ago on September 1, 2019.

Read: Massmart doesn’t plan to close Game stores or sell Masscash

Slape was parachuted into the position by US-based retail conglomerate Walmart – Massmart’s majority shareholder, which seems to have taken much more serious interest in the group over the last year.

His investment was well received by the market on Wednesday, with Massmart’s share price rising 3.65% to close at R28.71. On Thursday the stock surged more than 7% by around 14h30 South African time, taking it beyond the R30 a share mark and its highest level since April.

Massmart share price

The stock is still down more than 45% since the beginning of the year, largely due to the impact of the Covid-19 pandemic on the retail sector.

However, it’s worth noting that Massmart has seen around 80% of its market cap being wiped off the bourse since Walmart took a controlling stake in the group back in 2010.

Massmart reported its first full-year loss last year since listing on the JSE in 2000.

Slape’s turnaround plans have taken a knock this year due to the Covid-19 economic fallout, with the group reporting a headline half-year loss of R1.1 billion last week.

Slape however insisted during the group’s interim results presentation that the turnaround is well on track. In fact, he intimated that the restructuring is being accelerated by Covid-19, with tough decisions being made such as the full closure of its DionWired chain and some of its former Masscash stores.

Veteran retail analyst Syd Vianello tells Moneyweb Slape’s investment shows he clearly has great confidence in his strategy to turnaround the group.

“He is putting his own money on the line to demonstrate this. The strategy itself cannot be faulted… The unknown is whether customers will like the reintroduced clothing offer [in Game stores],” he notes.

“Only time will tell on that one. Remember people don’t buy clothing they don’t like – no matter what the price,” adds Vianello.

Listen to Ryk van Niekerk’s interview with the Massmart CEO:

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That is like a slape in the face.

Does anyone in Massmart understand Africa?

There is a correlation between CEOs from the USA and entities struggling (Sasol/SAA etc).

Great improvement on previous CE – – when you invest your own funds, you show the world you have confidence in your company and you abilities – unlike the previous Guy

Arm chair CEO’s from the US applying first world business practices in Africa has never worked and will never work

What does he know about Cambridge stores, up against Shoprite?

He should get into the stores and talk to staff and customers alike, much like Raymond Ackerman did

Wonder if he’s ever walked into a Game or Makro disguised as a customer?

He would be appalled at the lack luster service from staff and absent managers who spend their time behind a computer in their office

Start understanding your customer needs and above all, nothing beats service and staff who know their product

Thats why Independents will always thrive in this country, thanks to conglomerates like Massmart who are set in their ways and are far too Corporate who don’t understand the first thing about customer service

BEE has yet again taken the forefront when it comes to this at the expense of business savvy

Long live the Independent trader and good luck with turning the business around in your three piece suit

R 8 mill is about $ 400 K (Buys you half a house in the US).

The share has moved more than 10% in the last two days while the JSE is sinking. Seems like panic selling on the JSE again.

We need a big outside investor to invest aggressively in the JSE and kick start it.

The comments by Seve Roux are 100% correct .

If you walk into game here in Capetown the stores are a disgrace , there is no proper store layouts and a huge out of stock position on many categories.

A very high percentage of products have no shelf price label and the consumer will not purchase unless they know the price .

They are also half pregnant regarding their food offer if as they say they are getting out of food in Game then get out.

The absence of staff on the sales floor is a very serious concern .

I would suggest the CEO does a little more store visits and see what his problems are rather than take the easy way out by closing stores.

I sold by Massmart shares at R112 a few years ago.

For him R8m is nothing. He probably spends more on his wine collection in a year.

Wonder if he ever walks into Makro and tries to get help buying a product ?
Surely he would be amazed at the amount of staff “resting”!

Put R80m in

80 Mil US and you will start getting my attention.
R8 mil is back pocket change for the likes of him.

I wonder how many CEO’s have done such lately. Maybe they should start putting putting skin in the game, not company given shares obtained at below market value.

How to make a million … Take R8m and buy a retail store in Africa

I won’t spend R1.00 on Massmart.I am not convinced yet.

The 8 meter investment reminds me of (was it last year or 2018?) 72-car Durban July entanglement that ended in tears.

We need more people like him to flush out the negativity in our markets.

No wonder South Africa is dying,
if we all invested local instead of overseas,
the JSE/Economy would be doing very well.

Corruption exists everywhere!
The authorities should be doing their jobs and clean up.

Not sure why Walmart does not buy out the minorities and be done with the hassle of being listed.

End of comments.

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