When Guy Hayward shifted seats from Massmart CFO into the CEO hot seat on June 1, 2014, the Massmart share was trading at R135.09. Hayward could not have foreseen that the coming years would be among the toughest faced by South African retailers — after all, up until 2015 retail in South Africa had experienced fairly good growth, even post the financial crisis. However, when his resignation was announced on 6 May 2019, the share price, at R91, was 48% lower than it was five years previously.
While Massmart has good businesses like Makro and Builders Warehouse, others like Game and Jumbo Cash n Carry have been struggling. At the time, SA retail was slap bang in the middle of a truly “purple patch”, says Reuben Beelders, CIO at Gryphon Asset Management.Where a large portion of the South African market was previously serviced by informal traders, the last 15 years has seen the formal trade “take over” that territory. Social grants were a massive tailwind, and store-expansion was significant. But these tailwinds are now headwinds — social grants are built into the price and retail space is in abundance.
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