(Business Insider) – At the height of SA’s lockdown, the US giant Walmart provided a R4bn loan to Massmart – owner of Makro, Game and Builders Warehouse – to help it survive the crisis.
In an interview with Business Times, Massmart CEO Mitch Slape said that the local company faced a crunch when the stringent lockdown regulation shut down its business.
“In the heart of our challenges in level 5, in conversation with Walmart and looking for options to ensure that we had more than enough financial headroom, Walmart stepped up and put in place a R4bn loan for us to draw on in the event that it was required,” he told Business Times.
Walmart – one of the world’s biggest companies, with more than 2 million employees worldwide – bought Massmart in 2010, but has since seen the value of its investment decline by 80%. Slape said that the loan confirms Walmart’s commitment to Massmart.
This week, Massmart confirmed that it suffered a headline loss of more than R1 billion over the past six months.
Its total sales declined by 9.7% – despite a doubling in online sales. The group shut down its Dion Wired chain in March.
The 52-year old Slape joined Massmart in September. Described as a “Walmart old hand”, Slape has been with the US giant for almost a quarter of a century.
For much of that time, he was involved in Walmart’s businesses outside of the US – in Mexico, India and Japan.
Massmart is bringing in Martin Halle, who has been with Walmart in Latin America for more than two decades, to oversee the local company’s supply chain “reorganisation”. The company wants to save R1.9 billion in costs over the next three years.
Massmart is in negotiations with many of its landlords as it consolidates its mega-warehouse distribution centres – from 15 to 7 – and demands lower rentals for Game outlets, plus an end to big annual increases in rentals.
“Escalations in this market are ridiculous, they are ridiculous,” Slape said previously.