Massmart (GAME) could open up to 20 stores in Nigeria

South African retailer Massmart sees scope for up to 20 stores in Nigeria, its chief executive said, the second business leader in as many days to talk up consumer demand in Africa’s most populous country, one where poverty is on the rise.

“We have identified five or six cities in Nigeria and we see the potential of between 10 and 20 Game stores,” Grant Pattison said on a conference call.

“By all simple metrics, Nigeria has the potential to be larger than South Africa, but it has some way to go in terms of infrastructure and political stability.”

Massmart, Africa’s second-biggest retailer and 51 percent owned by U.S. group Wal-Mart Stores, itself the world’s biggest retailer, has two stores in Nigeria, with a third being built.

It reported a 19 percent rise in first-half diluted headline earnings to 407.3 cents per share, helped almost entirely by favourable currency swings as higher costs and discounts weighed.

Headline earnings per share, the main profit gauge in South Africa, was boosted by an 82.4 million rand ($11 million) foreign exchange gain, without which the rise would have been 2.9 percent.

Shares in Massmart, valued at 39.6 billion rand, were up 0.3 percent to 183.00 rand by 1300 GMT, with the JSE Top-40 index down 0.5 percent.

Retailers are increasingly targeting Nigeria, given its population and potential for growth. The country is home to nearly 160 million people, compared with South Africa’s 50 million, according to World Bank estimates.

Shoprite, the biggest retailer on the continent, said on Tuesday Nigeria could become as big a market as its South African home base, where it runs 700 stores.

Nigeria has many hurdles — red tape, a lack of retail infrastructure and poverty still rising despite strong economic growth. Nearly 61 percent of the population, or about 100 million people, live on less than $1 a day..

While consumer spending is slowly recovering thanks to low interest rates and above-inflation wage increases in South Africa, Massmart has yet to see the benefit flow through to its bottom line as it spends on an aggressive price and expansion strategy to double market share in food sales.

Massmart said sales increased 15 percent to 31.4 billion rand helped partly by food price inflation.

2 Comments

1. 

   Anonymous

   February 23, 2012 at 8:45 am

   GOOD
2. 

   Anonymous

   February 23, 2012 at 8:45 am

   GOOD