Sure Kamhunga
9 January 2009
Johannesburg — RETAILERS Pick n Pay and Massmart yesterday issued separate upbeat trading updates, with Pick n Pay saying it had been amazed at the resilience of cash-strapped customers who splurged on quality electronic gifts and food.
A few weeks into the normally busy festive shopping season, analysts and economists had issued downbeat predictions of poor sales as consumers tightened spending in response to high food and transport costs, as well as high debt levels.
But figures from the two retailers seem to defy the odds, with Massmart reporting increased sales in its divisions in the 26 weeks to December 28.
Massmart, whose stores range from wholesaler Makro and Game to building material merchants Builders Warehouse and Builders Trade Depot, said in a trading update that sales had increased 13,2% to R22bn. Comparable-store sales had gone up 11,9%.
The group said Massdiscounters, which operates the Game and Dion retail chains, experienced a 12,9% increase in total. Masswarehouse sales rose 14,8%, Massbuild 1,4% and Masscash 17,3%.
Pick n Pay said it was happy with festive season sales, attributing its performance to consumers' "amazing resilience" in difficult times.
Group financial director Dennis Cope said that, based on the current sales trends, matching a first-half 15% profit increase in the second half was "not out of our range".
Pick n Pay's turnover in the first half to August rose 16,4% to R23,7bn. Cope said the group had notched up a "mid-teens" revenue increase last month against the previous year, boosted by inflation and new stores.
The company was seriously looking at expanding into new potentially high-growth African markets such as Angola, Mozambique, Zambia and possibly Nigeria, and expected to enter a new market by the end of the year, Cope said.
Pick n Pay said that the percentage of shoppers making last-minute purchases three days before Christmas was far higher than in previous years. As expected, "consumers spent their hard-earned money wisely".
Gifts with long-lasting life spans such as MP3s, PlayStations and other quality electronic and computer durables were among the top sellers. Other practical gifts included back-to-school items and toiletries. The retailer said consumers also paid more attention to unit prices. The usual lines associated with Christmas -- turkeys and mince pies -- sold well.
Proof that many people had stayed at home, as predicted, could be seen in the growth in sales of braai accessories, outdoor games and pool toys. With Reuters, I-Net Bridge
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