SOUTH AFRICA – South African retailer Massmart has received a R4 billion (US$230m) inter-company loan from its parent company Walmart, an American multinational retail corporation to help it offset liquidity constraints triggered by the COVID-19 pandemic.
With the backing, Massmart, which owns Makro, Game and Builders Warehouse retail outlets has indicated that the group now has sufficient resources to meet its obligations, reports IoL.
“In addition to the facility support provided by local financial institutions, the group secured a R4bn inter-company loan from Walmart Inc to provide additional headroom in the event of unforeseen circumstances as we navigate through the lockdown period and beyond,” said Massmart.
The Covid-19 pandemic lockdown regulation, which restricted movement, had a significant knock-on effect on the retailer’s operations.
Massmart has estimated a staggering R2.3bn (US$132.2m) in missed liquor sales for April and May based on prior year sales due to Covid-19.
However, in line with level 3 lockdown regulations from the beginning of June it was now able to trade in all product categories with the exception of tobacco and related products.
The company said for the 9-week period from March 30 to May 31, total sales were R4.6bn (US$264.5m) lower than the same period during the prior year.
Massmart said that total sales for the 23 weeks ended June 7 amounted to R34.8bn (US$2bn), which was 10.3 percent lower than the prior year, while comparable store sales were 10.5 percent lower than last year.
Sales from South African stores amounted to R31.3bn (US$1.8bn), 11.5 percent lower than last year, with comparable store sales decreasing by 11.5 percent, Massmart said.
Total sales from ex-South Africa stores amounted to R3.5 billion (US$201m), or 1.2% higher than the prior year, with comparable store sales decreasing by 0.3%.
In the half year period ended June 28, the retailer expects loss per share to take a nosedive of at least 50% or 191.1 cents per share compared to 382.2 cent per share of the same period last year.
Headline loss per share is also expected to decline to182.4 cents per share, respectively from 364.7 cents per share registered in 2019.