Operational Profile

Massbuild

The Massbuild Brands

Massbuild operates three complementary brands: Builders Warehouse, which operates large DIY and home improvement stores in major urban areas; Builders Express, a chain of smaller neighbourhood home and garden improvement stores; and Builders Trade Depot, a chain of building contractor outlets located in industrial sites in peri-urban and urban areas.

Massmart initially acquired five Builders Warehouse stores operating in Johannesburg and Pretoria in 2003, bought and rebranded three De La Rey stores in the Western Cape in 2005 and now operates 27 Builders Warehouse stores in eight provinces. Builders Warehouse follows the big-box or warehouse retail format, offering home owners, DIY enthusiasts and building and maintenance contractors a comprehensive range of competitively priced products under one roof, with a large garden centre display and builders’ supplies yard. The format is unique in that it is the only home improvement warehouse in the country.

Builders Express was formed in 2005 when Massmart bought and rebranded 14 Servistar stores operating in the Eastern Cape and KwaZulu-Natal. Massbuild now operates 24 home and garden Builders Express stores in four provinces that cater to home owners. They have a strong focus on convenient locations, aesthetically pleasing displays, customer-friendly store layout and personalised service and advice. Builders Express is integrated into Builders Warehouse with a single management structure.

Builders Trade Depot was created when 34 Federated Timber stores were acquired and rebranded in 2005. Seven smaller stores have since been closed and, after the store conversions and acquisitions to date, Builders Trade Depot now operates 30 outlets catering mostly for medium- to large-sized contractors and tradesmen engaged in building, maintenance and renovation projects. It also focuses on servicing the needs of construction entrepreneurs who need trade credit, telephonic ordering and want bulk goods delivered from low-cost outlets.

Massbuild Fast Facts

Merchandise proposition: comprehensive range of home improvement and gardening supplies, tools and building materials
Massbuild brands: Builders Warehouse, Builders Express and Builders Trade Depot
Number of stores: 27 Builders Warehouse stores, 24 Builders Express stores and 30 Builders Trade Depot stores
Target Market: LSM 4-10
Divisional comparable store sales: 7.2% with estimated inflation of 0.8%
Total 52 week sales: R7,271m
2011 trading profit (before tax): R354.7m
2011 trading area: 412 996m²
Average trading area per store: 5 099m²
Geographic presence: South Africa
Number of employees: 6 834

Our Value Proposition

Builders Warehouse and Builders Express are both pioneers in introducing retail principles to the South African DIY and home improvement sector and attaching garden centres to hardware stores. The clean, friendly and uncluttered look and feel of our stores offer customers a shopping experience not traditionally associated with the industry. Our new stores aim to introduce ‘retail theatre’ where lighting, colour and ambience enhance the shopping experience, signage is clean and bold, and product displays are enticing.

Several of our private brands, including Mastercraft and Builders Pride, have become household names, with our customers assured of stringent quality control and best supplier practices. During the year private label contributed more than 8.6% to sales at higher margins, a trend that we expect to continue.

In both the residential and commercial property markets, Builders Trade Depot’s value proposition to customers is our ability to consistently deliver an appropriate, professional range at highly competitive basket prices, combined with exceptional contractor support services in a relationship-driven environment.

Financial Performance (June 2011)

		2011	2010	2009
		52 week	52 week	52 week
Sales	Rm	7,271.0	6,366.9	5,604.6
Trading profit before interest³	Rm	315.1	260.5	222.6
Trading profit before interest as % sales	%	4.3	4.1	4.0

Net finance income	Rm	39.6	31.2	47.5
Trading profit before taxation³	Rm	354.7	291.7	270.1
Trading profit before taxation as % sales	%	4.9	4.6	4.8

Operating profit before taxation	Rm	368.5	275.7	276.3
Operating profit before taxation as % sales	%	5.1	4.3	4.9

Inventories	Rm	1,062.1	943.6	801.4
Inventory days	days	74	74	73

Net capital expenditure¹	Rm	140.8	143.2	145.3
Cash flow from operating activities	Rm	(13.0)	165.4	137.1

Number of stores		81	76	71
Trading area	m²	412,996	384,625	357,589
Average trading area per store	m²	5,099	5,061	5,036
Number of employees		6,834	6,409	6,074

Sales per store	R000	86,697	80,495	78,938
Sales per m²	R000	17	16	16
Sales per employee	R000	1,064	993	923

1.	Net capital expenditure is defined as capital expenditure less disposal proceeds.
2.	The ratios have been calculated using year-end balance sheet figures.
3.	Trading profit is earnings before asset impairments, BEE transaction IFRS 2 charges and foreign exchange movements.
4.	Definitions/explanations to the ratios and terms above can be found here.