Tag: Game

Game owner Massmart acquires OneCart

By Penelope Mashego for News24

Makro and Game owner, Massmart, has acquired a controlling stake in online shopping and delivery platform, OneCart.

On Wednesday, Massmart announced that it reached an agreement to acquire 87.5% of OneCart after informing the market that both parties had been negotiating the transaction in August.

The online shopping and delivery service’s partners include Woolworths, Pick n Pay Dis-Chem and Clicks.

The acquisition forms part of Massmart’s e-commerce growth strategy.

“We are excited by the opportunities that this acquisition presents. eCommerce continues to grow rapidly, both in South Africa and for Massmart, contributing up to 3-4% participation in overall retail sales. We don’t expect this growth trend to change and have embarked on implementing the fundamental building blocks required for a strong ecommerce offering,” said Massmart’s vice-president for group eCommerce, Sylvester John.

He added that Massmart would continue to support OneCart’s independent retailer marketplace model, while growing the platform and enhancing customer experience.

The retail chain owner will provide equity funding to OneCart through an unsecured convertible loan and acquire shares from current OneCart shareholders. Onecart’s founder Lynton Peters and a minority shareholder will own the balance of the shares.

The transaction will be finalised once it has approval from authorities and has met the required conditions.

 

Game is Massmart’s biggest problem

Source: Knowledia

A trading update for the first half of the year from Massmart on Friday spooked investors who had been banking on a stronger recovery. The share closed over 9% lower at R54.95, having traded as much as down 11% on the day.

While the headline number seems “satisfactory” – sales are up 4.4% ­– it must be remembered that the group is comparing sales this year to a period last year during which the country was practically shut down for a month, with the level-5 hard lockdown from 27 March through the rest of April. In May, some restrictions were eased, and in June the economy was opened further. Compare the first half of this year to 2019 and sales have dropped 5.7% across the group.

Makro’s R13.7-billion in sales for the 26 weeks are 2.2% higher than the comparable period in 2019. At Builders, sales of R7.2-billion are 7.5% better. The real horror show is in the group’s cash and carry and Cambridge food businesses as well as Game.

Sales at Game were 7.6% lower than the same period last year, with comparable stores sales being 6.9% lower

Total sales in the cash and carry and Cambridge units is down by 9.8%, or R1.4-billion, when compared to the first half of 2019. This decline was led by Cambridge, which the group has been trying to sell for the last six months. Sales in this business, ranked eighth in food retail in the country, are 9.4% lower than last year.

A far bigger problem, however, looms at Game.

Massmart says sales at Game were “7.6% lower than the same period last year, with comparable stores sales being 6.9% lower” — this despite half the period being impacted by lockdown last year. (In South Africa, the decline was 4.6%.)

Compare sales at Game to the first half of 2019 (excluding the impact of lockdown), and although there is some impact of “lost” sales due to the closure of DionWired, these are down 19.1%! Game and Dion Wired were part of Massmart’s former Massdiscounters division.

The R6-billion question (the current value of its 51% stake) is how long Walmart will continue to waste management time – and money – trying to fix Massmart.

Massmart CEO Mitchell Slape has already done the easy work: shutting and selling underperforming stores, fixing retail basics in Game, stripping out large chunks of head office costs (by outsourcing central functions to Walmart suppliers) and securing a R4-billion (soft) loan from Walmart to bolster its balance sheet during a Covid-19 impacted year last year.

The rampant looting and destruction in July may have been the final straw.

Takealot is now half the size of Game

Source: Business Insider SA

Naspers on Monday announced a 65% surge in revenues at Takealot, in full-year results up to the end of March, to $606-million.

That makes for the equivalent of around R8.30-billion, or a monthly average not far below R700-million, for the unit, which includes the Mr D Food delivery business, fashion retailer Superbalist, as well as everything-store Takealot.com.

Mr D Food’s order volumes were up 117%, which saw its revenues more than double, said Naspers. In rand terms, Superbalist’s gross sales were up 45%.

On Takealot, third-party sales conducted via its platform grew faster than its own direct sales, said Naspers, after it added new sellers and new product categories.

In its most recent results, for the 52 weeks to the end of December, Massmart-owned Game recorded sales of R16.7 billion – down 15.5% from the year before. On a comparable-stores bases, its sales were down 13.2%.

Game suffered from trading restrictions on some categories of goods during hard lockdowns, but also said it has seen the impact of reduced foot traffic in malls, and shorter trading hours, plus trouble with stock due to both its own system issues and struggling vendors.

Its online sales were up 77.5% – but from a relatively small base.

Game, however, made money, reporting in its last full year a 21.7% increase in trading profit to slightly over R1 billion. Meanwhile Takealot unit’s “losses decreased to near breakeven”, said Naspers on Monday.

Takealot’s full year loss was $7 million, according to a Naspers investor presentation, the equivalent of a little under R100 million.

 

Makro and Game unveil Black Friday plans

Source: Supermarket & Retailer

Massmart has revealed the Black Friday 2020 plans for its Game and Makro retail stores. Both Game and Makro will be running Black Friday deals throughout November 2020, instead of their previous strategy of only releasing deals for a restricted three- to five-day period from 27 November.

This year, Black Friday deals from both stores will run from 2 – 29 November.

Massmart added that this plan will involve spreading deals over the month of November rather than concentrating deals into just one week or day.

“Black Friday traditionally sees high concentrations of shoppers in retail stores across the country, which can create a challenging shopping environment,” said Massmart Corporate Affairs Executive Brian Leroni.

“Therefore, we have taken the decision to reimagine the way we do Black Friday in 2020.”

“In an effort to create a more consumer-friendly Black Friday experience while adhering to all COVID-19 and social distancing protocols, Makro and Game have taken the decision to extend the duration of our Black Friday promotion,” Leroni said.

South Africa’s most popular Black Friday stores

Leroni added that Massmart’s research has shown that Game and Makro are South Africa’s most popular Black Friday shopping destinations.

“To further improve the shopping experience during this period, Game and Makro have, after analysing the Black Friday shopper information available to us, taken the decision to provide our customers with more opportunity and time to benefit from the Black Friday prices by rather releasing new Black Friday deals each week during the month of November,” Leroni said.

“These unbeatable specials will only run for the week in which they are announced, and will not be offered again – so we encourage shoppers to take advantage of the deals each week, rather than waiting until the end of November as they normally would.”

More information about the incredible deals including some big-ticket items such as large appliances, electronics, home living items, televisions and more will be provided in the coming weeks, the company said.

It added that sneak previews of some of the deals will be available on the Game and Makro social media feeds and email newsletters.

“Customers can subscribe to Game and Makro newsletters on each of the brand’s websites for sneak previews,” Massmart said.

 

Source: Supermarket & Retailer

Makro and Game owner Massmart says that its losses for the half year ending 29 June 2020 will be slightly lower than previously expected – but it still expects to take a significant hit.

In a sales statement published on Thursday (20 August), Massmart said it expects headline losses for the period to be between 31% and 41% lower than the same period last year.

While this is down significantly, it is a slight improvement from the over 50% decline projected in June. The slight boost has been attributed to lighter lockdown restrictions which came into effect during that month.

The group anticipates a R1 billion to R1.1 billion headline loss for the period, extended from a loss of R800 million recorded in 2019.

“June 2020 marked an improvement in sales in comparison to sales in prior months during the national level 5 and 4 Covid-19 lockdown periods,” the group said.

“Liquor, general merchandise and home improvement sales benefited from pent-up consumer demand, resulting in total sales for June increasing by 0.8% compared to the same period last year.”

However, this was still not enough to improve sales figures from last year. For the 26-week period ended 28 June 2020, Massmart’s total sales amounted to R39.6 billion, representing a decrease of 9.7% on the same period last year, with comparable store sales decreasing by the same level. Internal product inflation is estimated at 3.7%.

Total sales from South African stores for the 26-week period decreased by 10.6%, while comparable sales decreased by 10.5%.

“The Covid-19 national lockdown in South Africa had a significant impact on the trading performance of the Massmart Group. For the 9-week period from 30 March 2020 to 31 May 2020, total sales were R4.6 billion lower than the same period last year,” the group said.

Operating costs attributable to the execution of safety protocols in group stores – in accordance with regulated requirements – amounted to R62 million on a YTD basis, while the group added that other indirect costs related to the pandemic increased by R13 million.

Further, Massmart said its earnings are expected to be adversely affected by the impairment of the carrying value of some store level assets, as well as retrenchment costs relating to the announced closure of all of the Dion Wired and 11 Masscash stores.

A possible sale of the Masscash stores is also currently under review, it said. Mashcash includes: CBW, Jumbo Cash and Carry, Trident, Shield, Cambridge Food and the Rhino Group.

 

Source: News24

Retailer Massmart says it has started a consultation process under Section 189 of the Labour Relations Act that may affect 1 800 employees at Game stores in South Africa.

In a short update to shareholders on Tuesday, Massmart said the decision came after it “recently completed an assessment of opportunities to improve our South African Game store efficiencies”.

Section 189 of the act governs, among other things, the procedures that companies must be take ahead of any possible retrenchments.

In addition to Game, Massmart owns Makro, Dion Wired, Builders Warehouse and Masscash.

By Sibongile Khumalo for Fin24

Strained by operating under lockdown conditions since the end of March, the Wal-Mart owned Massmart is now seeking rental relief to manage its cash position.

The company’s stores such as Makro, Game and Builders Warehouse have only been allowed to sell essential goods during the lockdown period with the sale of alcohol banned under the current regulations.

“We will continue to proactively work with all suppliers and stakeholders to manage our cash position going forward including,” the company said in a trading update on Monday.

To save cash, it is “negotiating and participating in the rental relief package from the Property Industry Group”.

Various retailers have been hit by the shutdown or limited trading conditions and have been locked in rent negotiations with landlords, with property groups saying the lockdown is likely to have a negative impact on the commercial real estate, as Fin24 reported.

Massmart, which went into the lockdown already struggling under the weight of a sluggish economy and poorly performing Game stores, reported an almost 12% decline in sales for the 19 weeks to May 10.

The Covid-19 financial challenge comes on the back of declining profits as the group in 2019 reported a R861 million loss. This year it shut down its poor performing DionWired electronic stores and revealed that it would consider whether to close the 11 non-performing Masscash stores.

“We should also take into account that the company had lost a bit of market share before Covid-19 hit, the pandemic is now likely to delay their turnaround,” said Nolwandle Mthombeni, equity analyst at Mergence Investment Managers.

READ: Game, Makro and associated retailers freeze prices for essentials during lockdown

Mthombeni mentioned that the virus would have a “domino effect” on real estate as whole because landlords will now have to negotiate lower monthly rental with tenants who are battling cash flow challenges. The effect is also likely to extend to financial lenders as well, she said.

“Every single day of lost trade means income loss for retailers.”

Government has come under increasing pressure from various business organisations and political parties to open the economy, as companies continue to take a pounding from the restrictions.

South African has since moved to ease trade regulations as the country moved to level 4 of the lockdown and allowed the sale of winter clothing. By the end of the month, the country moves into level 3, which will allow for alcohol sales to resume, a significant category for retailers such as Massmart.

Will Walmart call it quits in SA?

According to a recent Business Day article, Massmart – who owns brands such as Game and Makro – is in trouble.

The company recorded a R550-million loss to June 2019, and investors have been told earnings will likely be less than 50% of what they were in 2018.

  • Walmart is the world’s largest bricks-and-mortar retailer. The company paid $2.3bn to buy 52% of Massmart in 2011
  • Walmart paid R148 a share, but today share prices stand at R44 – a 70% drop in value
  • Speculation is rife that Walmart may pull out of SA rather than buy the other 48% of Massmart
  • SA won’t be the first country Walmart has exited. It also gave up on Germany, Britain and South Korea, and is currently scaling back in Brazil
  • In 2010, Massmart generated cash of R2.6bn and paid dividends of R822.4m
  • By 2018, cash flow was at R2.8bn, and dividends marginally lower at R750m
  • Massbuild (primarily Builders’ Warehouse) would be an easy sell but it would be a struggle to find buyers for Massdiscounters (Game and DionWired) – stores that have been hard-hit by online competition
  • Other businesses in the stable are Masswarehouse (Makro and The Fruitspot) and Masscash, whose brands include Jumbo Cash & Carry and Cambridge Food
  • By 2020 it will be clear whether or not Walmart can extract value from its African conglomeration, or whether it breaks it into its pre-1990s components and sells them off.

Massmart confident it can turn Game around

Source: CNBC Africa

Massmart had a tough financial year, reporting a decline in headline earnings per share by 31.7 cents.

The biggest contributor to the company’s decline were Game, Dionwired and Hi-Tech.

Investors have been surprised by the extent of the decline.

According to Massmart CEO, Guy Hayward, the company’s sales are an accurate depiction of the general state of the South African economy.

“We are also disappointed in our profit growth, which is down 16%,” he says.

Food and Game are already 22% of total sales, and 2018 saw a move to Johannesburg and the restructuring of management and support roles.

“We are confident that we are doing the right things and that customers will respond to us in 2019,” Hayward says.

Turning Game around

Game will be kept very relevant to customers. The R20-billion business has up to 40% market share in many places; in fact, the company sees one in three TVs sold through it.
Going forward, Game will need to drive down costs and manage selling prices better.
“We need to make sure we offer customers wonderful merchandise that is very well priced. We need to shout about it; we need to make sure they know what they can buy in Game. We need to offer exciting products – maybe exclusive deals we have that no one else has, and we need to make sure our food is very well priced,” Hayward concludes.

 

Game headquarters could move to Jo’burg

Source: Supermarket & Retailer 

Durban could lose the headquarters of general merchandise retailer Game to Johannesburg, a move that could affect hundreds of staff members in the region.

Massmart Holdings Limited spokesperson Annaleigh Vallie confirmed that the move was eminent with Game management currently holding discussions with staff based at the retailer’s head office in Durban.

“It is, however, important to note that no decision on the move has been finalised,” said Vallie.

Massmart owns the South African local brands such as Game, Makro, Builder’s Warehouse, CBW and many others. It has four divisions, which are Massdiscounters to which Game falls, Masswarehouse, Massbuild and Masscash.

Walmart purchased a majority of shares in Massmart in 2011.

“The discussions are at a very early stage and currently involve consulting with approximately 330 potentially affected staff in order to ensure their input into the decision making process. From a legal perspective discussions of this nature typically take place within the framework of Section 189 of the Labour Relations Act.”

Vallie said currently no retrenchments were taking place in the region.

The company was of the view that if the potential move would take place, Game would benefit from being geographically closer to suppliers, Massmart and other group operating divisions.

Vallie said: “This in turn has potential to enhance commercial decision making and, group-wide collaboration and leverage.”

South African Commercial, Catering and Allied Workers Union (Saccawu) Kwa-Zulu Natal regional secretary Mathews Ndlovu said on Monday that the union was not surprised by the move. “Our objective is to try and make sure that there is no jobs lost in the process. We cannot stop the company from re-locating as part of their business restructuring,” said Ndlovu.

He said that if the staff members agreed to go to Johannesburg, they should receive relocation allowances and fees. “These things are on the table and have not been completed yet. As for those who are not willing to relocate must be accommodated in the perimeters of the province with same benefits which are not less favourable to what they are currently getting.”

Original article by Given Majola for IOL

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