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Massmart has taken a positive long-term view of consumer buying power and will forge ahead with store openings over the next three years, despite expectations of a cyclical slowdown in sales growth.

August 24, 2007 By Tom Robbins Cape Town – Massmart has taken a positive long-term view of consumer buying power and will forge ahead with store openings over the next three years, despite expectations of a cyclical slowdown in sales growth. Massmart, which owns the Game and Builders Warehouse chains, said yesterday it would add as much as 20 percent more trading space, or 200 000m2. In the year to June it added 3.7 percent space. At present the company has almost 1 million m2 of space through 238 stores, many of them big format outlets, such as Makro. New chief executive Grant Pattison said: “We will not change our plans for short-term upturns and downturns and will ignore these cycles completely.” While it would be tougher in the short-term, Massmart would miss the next up cycle if it waited, he said. The retailer would be careful in its expansion approach, tracking same store sales growth as a means to avoid the possibility of its stores stealing customers from each other. Pattison expected upward structural growth to the economy to continue over time, driven by economic growth above 4 percent, employment growth and significant infrastructure spend by private companies as well as the government. Cadiz African Harvest portfolio manager Mark Ansley said Massmart was not a retailer that took a flippant approach to store opening forecasts. In the year to June, Massmart profit grew by 27.8 percent to R1.06 billion, while sales were up 16.2 percent to R34.96 billion. But Massmart said that were it not for an accounting charge relating to its black empowerment deal, headline earnings would have been as much as 37 percent higher – and this would have been the highest growth since listing in 2000. It would pay a total dividend for the year of R3.20, a rise of 52 percent.