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Restructuring costs take large bite out of Massmart’s profits

| Retailer trading results

Massmart cut its interim dividend by 10.5% to 68c for the first half of its 2018 financial year from 76c in the corresponding period.

The South African subsidiary of Walmart reported that restructuring costs of R110m contributed to its net profit nearly halving to R197m for the 26 weeks to July 1 from R373m in the first half of its 2017 financial year.

Massmart expects to incur a further R56m in restructuring costs in the second half of its financial year.

The group’s interim sales at R41.7bn essentially remained flat, with the results including two sets of figures using new and old accounting rules.

"This year’s accounting for the adoption of IFRS [International Financial Reporting Standards] 9 and IFRS 15, which in particular excludes Shield’s sales from the current year, complicates performance comparisons between the results for the current and prior periods," Massmart CEO Guy Hayward said in the results statement.

Under the new accounting rules, Massmart’s top line shrank 2.2% while under the old rules sales it grew 1.9%.

Highlights included online sales growing by 69% to represent 1.6% of the group’s sales.

"Combined Makro, Game, DionWired and Builders Warehouse achieved a 23% increase in average online basket size and a 159% growth in online traffic," the company said in its results statement.

Five stores were opened and three were closed during the first half of the 2018 financial year.

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