• Wednesday, July 24, 2024
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South Africa retailer, Massmart, exits Nigerian market on FX hurdle

South Africa retailer, Massmart, exits Nigerian market on FX hurdle

Given currency volatility regarding its business and falling consumer demands, South African retail giant Massmart has sold its Games Discount World stores in Nigeria.

Findings by BusinessDay showed the assets were sold to the controlling shareholder of PricePointe Wholesale Club, an organisation that operates a wholesale store in Lagos.

Massmart’s Chief Executive, Mitch Slape had hinted last year that Massmart was disposing of its general merchandise Game stores in West and East Africa to stem losses after Walmart, a global retail behemoth, which presently owns a 51 percent majority stake in Massmart, reported continued losses for Massmart for FY 2021.

As part of a turnaround plan to stabilise the business, Massmart said it would review its store portfolio outside of Southern Africa. The review has now resulted in the disposal of 14 stores across Ghana, Nigeria, Uganda, Kenya and Tanzania.

Read  also: Why stability in formal retail may take longer to return

“The performance and the complexity in running those businesses is something that frankly we needed to address. We’ve commenced a formal sales process, we’re currently in discussions with potential purchasers to take on those stores,” Slape told investors.

The sale of the Games Discount World stores in Nigeria to PricePointe Wholesale Club was finalised after a 12-month period of evaluation and engagement with numerous parties.

Massmart envisages that overall store performance might improve under the management of investors who are more familiar with regional market conditions.

It also noted that Game South Africa would, after completion of the sale, continue to provide support to the purchaser toward ensuring their trading success, noting that this support would include allowing the purchaser to use the Game brand for a period of six months after formal completion of the sale, whilst also providing certain merchandise procurement support for a period of 12 months.

Majority shareholder of PricePointe Wholesale Club is also the purchaser of the Massmart assets in the four other countries which are part of the acquisition transaction.

The deal is subject to regulatory approvals in some of the affected countries.