General merchandise and food discounter
4.0%
Sales
R9,143.9 million
2017: R9,520.6 million*
Massdiscounters comprises the 142-store General Merchandise and Food discounter Game, which trades in South Africa and 11 other African countries; and the 22-store Hi-tech retailer DionWired in South Africa.

Total sales of R9.1 billion decreased by 4.0% and comparable sales were down 4.7%. Year-to-date product deflation was 4.6%. In Game’s South African stores, total sales declined by 2.3% and comparable sales by 2.9% which masks an improved sales performance in the second quarter. General Merchandise sales were the same as for the prior period and we gained market share in the domestic large appliances and Hi-tech categories. Game Africa’s total sales in constant currencies increased by 1.0%, but declined by 5.7% in Rands due to currency weakness, particularly in Mozambique and Nigeria. Given the difficult consumer environment for Hi-tech and appliances, DionWired sales were below those of the prior period.

As noted elsewhere, we began to relocate sections of the Game head office from Durban to Johannesburg and embarked upon an organisational restructure. The direct cost of this is about R116 million, of which R90.5 million is included in this reporting period. Annualised savings are estimated to be R30.0 million and will be realised from the second half of this financial year.

The Division continued to manage expenses well and, in total these were only 1.9% higher than the prior period, with a comparable expense decrease of 2.8%. We reduced inventory values to below that of June 2017. Both of these position the business to benefit from any positive sales momentum. The sales pressure was such that for the period Massdiscounters’ trading loss before interest and tax was R95.3 million (excluding restructure costs).

The new GK-POS point-of-sale roll-out was completed successfully across all but three Game and DionWired stores, improving speed at checkout and introducing additional value-added products and services for customers. In late 2017, Game launched its online shopping platform using SAP Hybris and DionWired moved from its legacy online system to SAP Hybris in March 2018. The more significant SAP ERP system implementation remains on schedule for early 2019.

During the year, two DionWired stores were closed decreasing Massdiscounters’ trading space by 0.6% to 545,460m² from December 2017. We are on schedule to open six new stores over the remainder of the 2018 financial year.

142
Stores in South Africa, Botswana, Ghana, Kenya, Lesotho, Malawi, Mozambique, Namibia, Nigeria, Tanzania, Uganda, Zambia
22
Stores in South Africa
Warehouse club
5.4%
Sales
R12,880.8 million
2017: R12,222.4 million*
Masswarehouse comprises the 21-store Makro warehouse-club trading in Food, General Merchandise and Liquor in South Africa; and Massfresh the Group’s fresh produce, fresh meat and bakery operations including The Fruitspot.

Total sales of R12.9 billion increased by 5.4% and comparable sales grew by 3.5%. Year-to-date product deflation was 0.7%, caused by deflation in General Merchandise and Food commodities. Total sales growth in Food & Liquor was 5.2%, a good performance given the consumer environment. General Merchandise sales growth was a very pleasing 5.7%, despite deflation and pressure on discretionary spending.

Resulting from our 21st Makro store opening in late 2017 and the ongoing investments in IT and online, expense growth of 10.4% (a comparable expense increase of 7.5%) was higher than sales growth. Trading profit before interest and tax decreased by 0.3% to R484.5 million.

Online sales grew by 27%. Our online platform now includes a successful marketplace offering (the sales or Gross Merchandise Value from which are excluded here). Later this year we will replace the legacy online platform with SAP Hybris.

No new stores in the period and trading space remained at 231,021m2.

21
Stores in South Africa
Home improvement retailer and building materials supplier
7.6%
Sales
R6,412.5 million
2017: R5,961.6 million*
Massbuild comprises 110 stores, trading in DIY, Home Improvement and Building Materials, under the Builders Warehouse, Builders Express, Builders Trade Depot and Builders Superstore brands in South Africa; and six Builders Warehouse stores in Botswana, Mozambique and Zambia.

With a very strong performance, Massbuild grew total sales for the year by 7.6% to R6.4 billion, with comparable sales increasing by 5.7% and year-to-date product inflation of 2.3%. It is noteworthy that for the period contractors’ sales growth was higher than that for retail customers. Total sales growth in our ex-SA stores was 11.2% in constant currencies and 8.1% in Rands.

Good expense management saw an expense growth of only 5.8% (a comparable expense increase of 2.9%) and trading profit before interest and tax of R280.5 million grew by 12.0%.

The product range on the Builders Warehouse online platform, launched in early 2017, has been expanded to 26,000 items and sales growth remains very high with incredible customer support.

Two Builders Express stores were opened and one Builders Trade Depot store was closed in South Africa, and one Builders Express store was opened in Maputo, Mozambique, resulting in a net trading space increase of 1.2% to 461,710m² from December 2017. Over the remainder of the 2018 financial year, we will open a further six stores, including one in Lusaka, Zambia.

38
Stores in South Africa, Botswana, Mozambique, Zambia
47
Stores in South Africa and Mozambique
14
Stores in South Africa
11
Stores in South Africa
Food wholesaler, retailer and buying association
0.3%
Sales
R13,121.2 million
2017: R13,079.9 million*
Masscash comprises 55 Wholesale Cash & Carry stores, and 62 Retail stores trading in South Africa; 13 Cash & Carry stores in Botswana, Lesotho, Mozambique, Namibia, Swaziland and Zambia; and Shield, a voluntary buying association.

As noted earlier, the adoption of IFRS 15 has the effect of excluding Shield’s sales from the current period, consequently the figures below are on a like-for-like basis.

Total sales of R13.1 billion increased by 0.3%, while comparable sales decreased by 2.0%. Year-to-date product deflation fell to 0.3% in June 2018, with commodities like maize, wheat, oil, sugar and rice remaining in price deflation. Commodities represent 18% of our Wholesale sales and, excluding this category, the remaining Wholesale business grew sales by 4.5%. Cambridge and Rhino performed well in this difficult consumer environment, growing total sales at 4.3%.

As noted elsewhere, we announced the relocation of the Masscash regional office from the Durban area to Johannesburg and an organisational restructure. The direct costs of these are estimated at R50.0 million, of which R19.8 million is included in this reporting period. This restructure will produce estimated annualised savings of R22.0 million which will be felt from the second half of this financial year.

Expenses were well managed and were only 0.4% higher (a comparable expense decrease of 2.0%). The soft sales performance caused a trading loss before interest and tax of R4.1 million (excluding restructure costs).

One Retail store and one Wholesale store was opened in South Africa resulting in a net trading space increase of 2.9% to 388,070m² from December 2017. We should open five new stores over the remainder of the 2018 financial year.

 

 

 

 

 

 

 

* Like-on-like basis, including material impact of IFRS 15 in both years.

 

68
Wholesale stores in South Africa, Botswana, Lesotho, Mozambique, Namibia, Swaziland, Zambia
62
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