| Wed 13 Nov 2002, 14:33 | | Trading Update |
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MASSMART PROVIDES TRADING UP-DATE AND PUBLISHES NEW STYLE ANNUAL REPORT
Press release
13 November 2002
Massmart, South Africa`s third largest distributor of consumer goods, today up-
dated the market for the year to June 2003, in time for the crucial Christmas
selling season.
In the group`s latest annual report, Massmart said: "Sales growth to Sunday 20
October 2002, the first 16 weeks of the 2003 financial year, is 30% on a
comparable basis and 36% including the Furnex acquisition for the first time.
This growth is consistent across all divisions and all product categories.
Comparable store sales growth for the same period is 31%. Profitability is ahead
of budget and well ahead of the comparable period in the previous year."
The company went on to add that in the "absence of deteriorating Southern
African economic conditions, Massmart is poised to produce earnings growth in
excess of sales growth, at the forefront of the retail sector."
Massmart, now in it`s twelfth year of existence and the second as a public
company, has shown 67.7% compound annual growth of headline earnings per share
over the last five years.
The latest Annual Report, which has been prepared in line with the
recommendations set out in the King II code on corporate governance, establishes
a new level of disclosure and transparency for the Group. The report includes a
new section entitled `Human Capital review` which provides a thorough profile of
the Group`s approach to employment equity and diversity, human resource
development and training, and Employee welfare.
An additional section, `Societal Responsibility`, sets out how the Group sees
its role in contributing to the welfare of all its stakeholders and the wider
context of social investment. This includes an intensive programme of social
investment that the Group sustains across all nine provinces in South Africa as
well as in Namibia, Botswana and Zambia. The primary focus of this programme is
in education and training.
Commenting in the Annual Report on the new levels of disclosure, the Executive
Directors said: "This Annual Report reflects our dedication to the continual
improvement of qualitative and quantitative disclosure."
Commenting on the year under review, the Executive Directors said: "Good all
round performance in the first half established a platform for exceptional
growth in the second during which strong underlying, comparable store growth was
enhanced by acquisitions, growing consumer confidence and inflation, the latter
estimated to have contributed approximately R20m to Group pre-tax profits. The
result was record sales, profits, earnings per share and cash from operations."
On prospects, the directors concluded: "We remain cautiously optimistic about
Massmart`s prospects in a challenging trading environment.
"Within the South African retail and wholesale sector, the rationalisation of
assets, formats and outlets together with the clarification of the consumer
proposition, is resulting in a polarisation of profitability around those
predominantly cash-based participants who adapt to efficiently satisfy the
evolving consumer profile with exceptional value. Within Africa, traditionally
underserved or exploited markets respond enthusiastically to similar value."
"Massmart intends remaining at the forefront of these seminal trends through
superior merchandising, cost control and asset management, with continuing
emphasis on cash generation and the acquisition and integration of businesses
that will benefit form our ownership."
"Although we remain confident that Massmart will produce a real growth in
earnings per share at the forefront of the retail sector, shareholder attention
is drawn to the past year`s exceptional second-half growth arising from the
acquisitions, an additional two months sales contribution from Makro Woodmead, a
53rd week, and some inflationary pressure in selected product categories.
Second half growth in the current year off this high base is therefore likely to
be relatively muted."
-ENDS-
For media enquiries:
Rob Pinker Brunswick 011 268 5750 or 083 326 7794
Taryn Proksch Brunswick 011 268 5750 or 083 273 1301
Date: 13/11/2002 12:30:23 PM Produced by the JSE SENS Department
