JSE-llisted mass retailer Massmart expects to report a headline loss of between R1.48-billion and R1.57-billion and a headline loss for continuing operations of between R938-million and R1.02-billion for the 52 weeks to December 26, 2021.

"Earnings and headline earnings have been negatively impacted by the asset losses and loss of trading income suffered as result of the looting, coupled with the timing differences relating to the recognition of business interruption insurance recoveries," Massmart said in a trading statement on February 18.

It further noted that it was likely to report a net loss of between R2.14-billion and R2.3-billion and a net loss for continuing operations of between R1.5-billion and R1.66-billion. Continuing operations exclude the Cambridge, Rhino and Massfresh businesses.

In a December trading statement, Massmart said that the gross replacement cost of inventory lost and assets damaged during the July 2021 unrest was about R2.5-billion and the total accounting loss, net of insurance proceeds, was estimated at about R650-million.

Massmart received an initial insurance payment of R435-million, excluding value-added tax (VAT), from the South African Special Risk Insurance Association (Sasria) in September 2021 and the balance of R565-million, excluding VAT, was approved by Sasria in December 2021 as full and final settlement of the claim.

The final payment from Sasria is expected to be received after year-end.

"In addition to the material damages suffered, lost trading profits resulting from damaged stores for the period July to December 2021 is estimated at about R450-million. While the quantification of full business interruption losses continues, the group is comfortable that it is adequately covered for the full extent of these losses. An initial business interruption payment of R100-million, excluding VAT, was received from our insurers (non-Sasria) in December 2021."

Despite the various headwinds experienced in 2021, including the continuing impact of Covid-19, the July civil unrest, slower hotel, restaurant and café recuperation, large commercial and government construction projects slowdown, intermittent load-shedding, a soft discretionary spending economy and group-wide strike action, Massmart management remains firmly focused on the execution of the turnaround strategy.

"The re-lay of our 114 Game stores in South Africa has now been completed. This re-lay has provided important insight into the potential of individual stores and has resulted in the initial identification of 15 stores that will be subject to a possible sale. This decision represents an intensification of our initiative to optimise the Game store portfolio as we move beyond our turnaround imperative, to prioritise investment in core and high returning trading assets.

"We have made significant progress on the previously announced sale process to withdraw from ex-Southern Africa Development Community (SADC) markets through the divestiture of our 14-store Game portfolio in East and West Africa and anticipate being in a position to further update the market in the coming weeks."

Further, the transaction to dispose of Cambridge Food, Rhino, Massfresh and 14 Cash & Carry Stores to Shoprite is currently under review by the Competition Commission with a recommendation to the Competition Tribunal expected during the first quarter of this year.

"We have been working closely with our advisers and the Tribunal, and have submitted feedback and supporting information on requests received to date.

"In line with our strategic focus on developing our e-commerce proposition, we have now centralised our trading banner website, mobile and market place capabilities into a strong group-wide centre of excellence underpinned by an e-commerce investment programme which allocates significant capital and resources into the eCommerce business over the next three years.

"Our investment priority remains to develop improved e-commerce trading platforms, omnichannel sales and on-demand shopping and delivery services," the group reported.

Massmart management’s Smart Spend initiative continues to deliver savings and is on track to deliver the R1.9-billion cost-saving target by the end of 2022, with about two-thirds of this saving having been achieved already.