Despite a difficult and deteriorating consumer environment, retail property group Massmart Holdings’ total sales for the 26-week period of R41.6-billion represented an increase of 1.9%, with comparable store sales increasing by 0.2% in the six-month period to June 30.

While economic conditions in the 12 other African countries where it has stores were also difficult, Massmart pointed out that South Africa, which generates 91.6% of group sales, experienced an economic backdrop of a reported 2.2% contraction in the first quarter's gross domestic product growth, highlighting that consumers were adversely impacted on by the April value-added tax increase and petrol price increases.

Product deflation was 0.7%, while total sales from Massmart’s South African stores for the period grew by 2% and comparable sales by 0.5%.

Total sales from its stores outside South Africa for the period grew by 5.7% and comparable stores by 0.6%.

On a like-on-like basis, gross margins for Massmart declined slightly from 19.7% to 19.6% which was caused primarily by margin pressure from deflation in food.

Expense management remained effective with total expense growth, excluding restructuring costs, of only 3.9%, while comparable expense increases were limited to 2.1%.

The pressure from the current period's low sales growth caused group trading profit before interest and taxation, excluding restructure costs, to decline by 19.5% to R664.2-million.

Headline earnings decreased by 42.2% to R210.9-million, while headline earnings, excluding restructure costs, decreased by 20.4% to R290.3-million.

“We continued pursuing new revenue streams and in the six-month period saw significant growth in our value-added services (VAS) business. This was achieved through double-digit growth across the VAS product portfolio in the areas of money transfers, lotto sales, RCS credit product sales, and extended warranties,” the company explained.

It further added that an omnichannel focus, which improves customers' choice and experience, was rewarded with the group's aggregate online sales growing by 69%.

During the period, five stores were opened and three were closed, resulting in a net trading space increase of 0.8% to just over 1.6-million square metres.

Massmart plans to open another 17 stores over the remainder of this year, with its African growth plans remaining on track.

In terms of financials, for the 33 weeks to August 19, total sales amounted to R53.2-billion, representing a like-on-like increase of 2.3% over the prior period.

Comparable store sales increased by 0.4%, while product deflation is estimated at 0.5%.