Goodbye Dion Wired

Massmart has started consulting with unions about store closures and jobs cuts, as the South African unit of Walmart battles to recover from an earnings slump.

Bloomberg reported the plan is to shutter the 23-store Dion Wired chain of hi-tech appliance shops and 11 Masscash wholesale outlets, a spokesman said by phone on Monday.

“Employees and the South African Commercial, Catering and Allied Workers Union have been informed and the process may take at least two months,” reported Bloomberg.

“About 1,440 employees could be affected, the Johannesburg-based company said in a statement. The shares climbed 2.4% to R50 as of 11:22.”

“The move marks the first significant act by Massmart’s new chief executive officer, Mitchell Slape, who arrived from Walmart in September with a brief to turn around the retailer. The company, which also owns the South African chains Game and Makro, slumped to a loss in the first half of last year as shoppers stayed away amid an economic downturn,” stated Bloomberg.

“Massmart cut its full-year dividend by 40% last year and scrapped its interim dividend. The stock has more than halved in value over the past 12 months, the worst performer of the 13 stocks on the FTSE/JSE Africa General Retailers Index.”

“Massmart has a total of almost 450 stores across 13 countries in sub-Saharan Africa and about 48,500 full-time employees.”

Massmart operations

This follows after Massmart announced a plan to cut jobs across the company.

“The Massmart Group has recently conducted a store optimisation project that highlighted a number of underperforming stores in its portfolio,” said Massmart in its initial statement.

“Consequent to this project the Massmart Group seeks to advise shareholders that Massmart has commenced a potential store closure consultation process in terms of section 189 and section 189A of the Labour Relations Act.”

According to Massmart’s website, its Masscash division consists of the following stores:

  • Jumbo Wholesale
  • Jumbo Shield
  • Rhino Cash and Carry
  • Cambridge Food

Massmart operates a range of well-known retailers in South Africa in addition to the companies listed above.

These include the “Builders” stores, consisting of the Warehouse, Express, Trade Depot, and Superstore outlets.

Reporting with Bloomberg

Now read: Massive job cuts at Dion Wired and Massmart

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Goodbye Dion Wired