While JSE-listed Massmart’s consumer goods stores Makro, Cash & Carry, Game, Shield Buying Group and Cambridge Food will continue to operate during South Africa’s lockdown, the company did warn of disruption to its supply chain to stores outside of South Africa.

“The closure of South Africa’s borders to neighbouring countries has caused a degree of disruption to our supply chain to stores outside South Africa, which accounts for about 10% of group sales,” the company elaborates.

These stores have relatively higher levels of safety stock that are likely to meet immediate term supply needs. Thereafter, the company will be reliant on support from existing local suppliers in the affected markets.

“While the effects of the Covid-19 virus on our business are continually being reassessed, the full impact of the 21-day nationwide lockdown announced on March 23 remains unknown.

“The high level of uncertainty, owing to the unpredictable outcomes of this disease, complicates the estimation of the financial effects of the outbreak and as a result it could materially impact the results of the group negatively and the assumptions applied in our assessment of provisions and impairment considerations,” Massmart says.  

The company adds that, with the support of its majority shareholder Walmart, it has concluded constructive discussions with funders and is satisfied that the company has sufficient funding in place during the lockdown period.

“Top leadership focus has now turned to post-lockdown recovery planning. We are fortunate that our cost containment initiative, presented at a Investor Strategy Briefing on January 30, is at an advanced stage and is well poised to deliver savings.

“The project team will continue work on this initiative during the lockdown.

The lockdown has also presented opportunity to deploy selected Builder's merchandise specialists to assist with the review and reinvigoration of the Game merchandise assortment which will be beneficial to our efforts to reset the Game format,” Massmart states.

Meanwhile, Massmart supports the measures that the South African government has implemented to contain the Covid-19 virus.

The Massmart group’s stores will trade in basic and essential goods in alignment with lockdown regulations as they pertain to essential retail activity.

The company has implemented various initiatives to ensure customer and associate safety while also taking steps to optimise supply of basic and essential goods to support trading in these formats during the lockdown.

Similarly, the company’s stores’ online platforms will process and fulfil customer orders of basic and essential product. Builders and Game are processing the online sale of durable goods for delivery once the lockdown has been lifted.

The Builders formats, Massmart’s non-essential product distribution network and its home and regional offices will continue to be closed for the remainder of the lockdown.

Almost all home and regional office associates are working remotely.

This protocol has been thoroughly stress-tested and is being closely managed in terms of clearly defined work from home protocols.