Tag: Game

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

Massmart could finally be starting to deliver after nearly a decade of less-than-inspiring results.

But the revival of the R91-billion annual sales Walmart-controlled retailer’s fortunes is far from being a slam dunk.

Massmart certainly pleased the market in its annual results announcement of a 15.8% rise in headline EPS (HEPS). This was greeted by a 16% rise in its share price.

Massmart’s pricey 25 p:e indicates that more of the same is expected. A big swing factor will be its ability to continue driving a recovery in its Massdiscounters division, which houses Game, one of the group’s flagship brands.

“Game is key to the Massmart investment case,” says Warren Jervis, manager of the Old Mutual Small & Mid Cap fund.

The signs are positive for the 165-store discount division. It came to the party in 2016, lifting profit before interest and tax (PBIT) by R129m (54.8%) to R364m.

It accounted for just under half the group’s total R264m rise in PBIT to R2.61bn.

The division’s 5.3% rise in sales to R20.5bn was nothing to rave about. Doing the heavy lifting was a rise in the PBIT operating margin from 1.2% to 1.8%.

But there is still a long way to go if Game is to return to its former glory when, at its peak in 2011, it delivered PBIT of R744m and a 5.6% operating margin.

Then the wheels started coming off. Key reasons for this included ageing stores and a failure to keep pace with a rapidly changing consumer electronics landscape. At its worst in 2014, the division’s PBIT stood at R181m.

Jervis believes Game’s recovery still has long legs. “There is no reason it cannot get its margin up to at least 3%,” he says.

It would make a big difference. On a 3% margin, Game’s PBIT contribution in 2016 would have been R615m.

A key factor in upping margins will be the rollout of Game’s SAP point of sale and enterprise resource planning systems.

“It will provide visibility of profit per product line,” says Sasfin Securities analyst Alec Abraham. “It will enable Game to fine-tune its product mix.”

Game’s turnaround was engineered by Massmart veteran Robin Wright, who stepped down as
divisional CEO in August 2016.

Tasked with the next recovery phase is Albert Voogd, who joined Massmart from Ahold, the Netherlands’ largest food retailer.

The selection of Voogd ties in well with Massmart’s big ambitions in food retail. There is already a notable swing in Game’s product mix to food and fresh produce which, together with a recently added liquor offering, accounted for 23% of Game’s sales in 2016.

This was up from 21.8% at the June interim stage.

Abraham agrees that Massmart can continue driving food retail sales at a well-above-market pace. In its favour, he notes, is a small market share of 2%-3% across its Game, Makro, Cambridge and Rhino brands.

But he has concerns about the general state of SA’s beleaguered consumer market.

“It does not support Massmart’s [big-volume, low-margin] business model.”

The signs of strain are already there, not least in the group’s largest division, Masswarehouse, which houses 20 Makro megastores.

While Makro did exceptionally well in 2016 to lift sales by 11%, it came at the cost of big margin pressure; PBIT of R1.25bn came in just 4.4% higher than 2015.

Taking even more strain was the Massbuild division, housing 102 stores under brands including Builders Warehouse and Builders Express. Sales for the year came in 5.6% up at R12.7bn, while PBIT — hit by margin squeeze — was up only 2.7% at R712.6m. More concerning is the fact that second-half PBIT was up a mere 0.7% year-on-year.

For Massmart, 2017 did not get off to a good start. In the eight weeks to February 19 the group reports total sales up a mere 0.6% and comparable (same store) sales down 1.5%.

It represents a significant slowdown against the previous three years. On a comparable sales basis, sales in the first eight weeks of 2016, 2015 and 2014 were up 6.9%, 7.9% and 7.7%, respectively.

Against the likes of Woolworths, trading on a 16 p:e, and even Shoprite on a 20 p:e, Massmart’s 25 p:e is looking decidedly stretched.

By Stafford Thomas for www.businesslive.co.za

SMEs and start-ups can now process card payments cheaply with a device from a leading local retailer.

A partnership between home-grown fintech-preneurs and one of South Africa’s largest discount retailers is set to help small businesses by allowing them to transform their phone into a secure mobile point of sale (mPOS) terminal. They will be able to process debit and credit cards, cash and mobile payments with an iKhokha device.

This low-cost payment system, developed by three Durban-based entrepreneurs, the father and son team Matt and Clive Putman, and close friend Ramsay Daly, rolled out into flagship Game stores across the country this week.

Says Jody Forrester, cellular executive for the JSE-listed Massmart subsidiary, Game: “Ordinary South Africans with a business idea can now walk into one of our stores and walk out with everything they need to start trading – equipment, tools, consumables, Internet connectivity and a safe, cashless customer payment device.”

iKhokha MD, Matt Putman, says iKhokha emerged from their realisation that small and startup businesses were often overlooked by larger institutions providing financial products and services. “We also recognised the challenges that people starting a business faced when it came to collecting cash and digital payments from customers.”

The iKhokha device is a mobile card machine that allows anyone with a small business to accept debit and credit card payments. The only requirement is a cell phone signal, and the buyer then enters his or her pin on the device. It is being sold in 11 Game stores nationwide and will be rolled out into 35 stores over the next few months.

“We are empowering entrepreneurs in South Africa by offering them all they need to start or grow their business using the Game Store Card, which gives them the cash flow flexibility required as a startup. They can then simply buy what they need, walk out of the store, and immediately start earning and trading using the low cost, mobile iKhokha device. They can buy the unit, or purchase it along with a SIM card and a smart phone as part of a Vodacom contract or a pre-paid option,” says Forrester.

iKhokha’s pricing is far below that of mainstream SME-focussed financial services products, with transactions charged at only 2.75% (excluding VAT) instead of the standard 3,5% that banks typically charge. But Putman says their device is far more than just a cheap payment device. “It provides the merchant with powerful information on their sales over time and empowers them to track and properly manage the finances of their growing enterprise.

“While cash payments can also be accepted, iKhokha eliminates the need for actual cash, which is expensive to handle, is a security risk and harder to track because it quickly gets ‘lost’ with day-to-day purchases not directly related to the business.”

This South African developed and manufactured solution has been through rigorous international testing with regulatory bodies and card schemes to ensure world class security. “The security certifications were an important factor in our decision to partner with iKhokha,” says Forrester.

iKhokha is a gold member of AlphaCode, a Rand Merchant Investments (RMI) club for fintech startup entrepreneurs.

RMI’s senior investment executive and head of AlphaCode, Dominique Collett, says: “We believe that the SME segment has been largely underserved by South African financial institutions. Yet the market is a significant one. Research shows that only an estimated 17% (+/- 1 million) of SMEs are formal and registered and therefore can access formal financial services. This number is even more significant when one sees that the average annual turnover of registered SMEs is around R1,3-million with an average annual net profit of R500 000.

“There is very low POS penetration in the SME segment (less than 10%), yet there is growing demand from consumers to transact in a cashless manner. This creates an opportunity to close the gap by offering POS solutions to about one million SMEs that do not have card facilities, yet most likely have a need for them. SMEs demand simple, low cost, convenient product offerings and we believe iKhokha delivers this with their simplified pricing structure and plug-and-play offering. Distribution is always a key element in the success of any financial services business, so the partnership with Game is an exciting one.”

Forrester adds that the incorporation of iKhokha into Game’s product offering is completely aligned with Game’s positioning as a South Africa’s leading discount retailer. “It underlines our strategy to continuously bring innovation into our stores, specifically around our in-store cellular offerings.”

“We also like that Game’s genesis was in Durban, KwaZulu-Natal, and iKhokha is a ground breaking innovation that comes from young Durban-based entrepreneurs.”

Putman explains, “The name is derived from the isiZulu word iKhokha which means they pay, he pays, she pays. Our goal is to transform small businesses through mobile innovation and become the go-to brand for SMEs seeking key financial services in SA. We also realised that we needed a distribution partner to make our device accessible to the majority of SMEs in SA. This partnership with Game is a huge step towards realising that goal.”

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