Cape Town - Bulk retailer and wholesaler Massmart streaked ahead of market forecasts yesterday, posting a whopping 95 percent rise in trading profit to R539 million in the year to June.
This was before recent acquisitions, leading executive chairman Mark Lamberti to predict confidently that results would be "the best in the retail sector this year".
Record results were also mirrored in cash flow from operations, which were up a staggering 97 percent to R677 million.
Massmart's recent payment of R18 million to the SA Revenue Service, after some of its vendors underpaid VAT, had been taken out of headline earnings.
He attributed the roaring performance to the culmination of strategies put in place 12 years ago, the high calibre of people in Massmart who had implemented these strategies and the positive response by consumers to Massmart's good value offering.
He said: "In every respect, Massmart experienced the best year in its 12-year history. All divisions have delivered improved performances in the face of aggressive activity from competitors."
Massmart, whose core brands are Dion, Game and Makro and, more recently, Jumbo Cash & Carry, was now the market leader in general merchandise and liquor, and the fourth-largest retailer in food in southern Africa.
The wholesale and retail group had been offered troubled news agency and stationery business CNA "on a number of occasions", but the business did not fit with Massmart's high-volume stores.
Sales for the full year rose by 44.4 percent to R16.7 billion - between R1 billion and R2 billion ahead of what analysts had pencilled in.
Headline earnings a share bolted 67 percent higher to R1.832, while the final dividend was pegged at 36c a share from 21c a year ago.
Recent acquisitions Jumbo Cash & Carry and Browns and Weirs Cash 'n Carry, acquired from services group Rebhold, had been earnings enhancing.
Some inflationary pressure had hit selected product categories, but analysts said Massmart catered to the middle to upper end of the consumer market, which was better able to absorb price hikes in selected categories.
Of all group divisions, Lamberti highlighted sales at Massdiscounters - made up of Game and Dion - which were up 26.3 percent. Profit before tax surged 110 percent.
Lamberti said the main effect on Massmart of the unbundling of Wooltru had been an uptick in the volume of shares traded. As a result there was less volatility in the share movement.
Growth in the second half of the year could be more muted, but Massmart was on track for real earnings growth "at the forefront of the retail sector".
The share price bounded 45c higher to end at R14.45 on the JSE Securities Exchange yesterday.