S. Africa's Massmart posts lower Q4 sales on softer Black Friday, signs deal with Genpact

JOHANNESBURG (Reuters) - South African retailer Massmart on Thursday posted lower sales for the fourth quarter, which includes the crucial holiday season, due to less foot traffic, a softer Black Friday trade and coronavirus curbs.

Shoppers stand outside the outlet for Massmart-owned Game Store in Polokwane, Limpopo province, South Africa, June 1,2019. REUTERS/Siphiwe Sibeko

The Game and Makro department chains owner has also concluded a transaction to partner with Genpact, a global professional services firm focused on finance and accounting transformation.

Massmart, majority-owned by Walmart Inc, said total sales fell 4.1% to 25.6 billion rand ($1.72 billion) for the three months ended Dec.27, from the corresponding year-ago period, with comparable store sales decreasing by 3.6%.

Sales over the traditional November Black Friday trading period were softer than those seen in 2019, but, the company’s extension of Black Friday promotions throughout the month of November did mitigate the impact of softer Black Friday weekend sales to some extent, it said.

“The economic impact of the pandemic on consumer spending was evidenced by a general reduction in foot traffic, particularly in regional shopping malls, impacting sales in many merchandise categories during the fourth quarter,” Massmart said.

Foot traffic and sales also remained muted in the December holiday season, albeit with stronger sales performance in home improvement and DIY categories.

For the 52-week period ended Dec.27, total sales amounted to 86.5 billion rand, representing a decline of 7.7% over the year-ago period, while sales in its South African stores fell by 7.9% and sales in the rest of Africa store decreased by 5.4%.

Massmart announced a turnaround plan earlier last year to re-organise the group into a leaner, more agile, two business unit structure supported by shared centres of excellence.

As part of this, Genpact, which is a strategic partner of Walmart Enterprise Business Services, will manage Massmart’s financial transaction processing services, Massmart said.

“We are grateful to Walmart for their continued commitment to Massmart’s turnaround process. I am also proud of the pace at which we are executing against our turnaround plan,” Massmart Chief Executive Mitch Slape said.

As per terms of the deal, Genpact will establish two financial processing centres of excellence in Johannesburg and Durban.

Reporting by Nqobile Dludla; Editing by Clarence Fernandez and Shailesh Kuber