As part of the turnaround plan, and as previously announced, the Group successfully closed 23 DionWired stores during the period.

Game’s total sales, excluding DionWired, for the 26 weeks of R8.2 billion represents a 9.2% decrease compared to June 2019, while comparable store sales contracted by 10.2%. Product inflation was 4.6%.

Trading restrictions in South Africa resulted in reduced categories permitted to trade in Game in the second quarter; 29% in April, 67% in May and 80% in June 2020. Lost sales from the Covid-19 pandemic impact is estimated to be R0.9 billion. While we saw a decrease in foot traffic, basket sizes increased during this period. Game’s online sales increased by 100% compared to the prior year period. Teething issues from the SAP S/4 HANA ERP system implementation, after a four year journey, negatively impacted sales. Sales from the South African Game stores declined by 11.0%. Sales from the rest of Africa stores decreased by 1.5% in Rands and by 6.2% in constant currencies due to continued currency weaknesses during the period.

Reduced stock obsolescence from improved stock management and optimising product and promotional mix from the shift towards the EDLP proposition improved gross margin by 220bps to 25.5%. Cost saving initiatives implemented resulted in savings in occupancy costs from successful rental re-negotiations, better supplier price negotiations and efficiencies realised through improved overtime scheduling. Expenses decreased by 1.0% and comparable expenses decreased by 0.4%. Included in this are the IT costs associated with the system implementation.

No Game stores were opened nor closed during the period. The closure of 23 DionWired stores resulted in trading space reducing by 3.5% to 542,392m².

Builders total sales of R5.8 billion represents a decrease of 13.3% compared to June 2019, while comparable store sales declined by 14.1%, with product inflation of 6.2%.

Trading restrictions resulted in the closure of all South African Builders stores under lockdown level 5. Lost sales from the Covid-19 pandemic impact is estimated to be R1.0 billion. Sales from South African stores declined by 14.8% and by 15.7% on a comparable store sales basis. Sales from the rest of Africa stores increased by 2.4% and was flat in constant currencies.

The slowdown in the construction sector was exacerbated by the lockdown. Post the lockdown level 5 period, Builders stores have seen an increase in retail sales as consumers continue to prioritise home improvement and DIY projects. This, combined with optimising product and promotional mix resulted in an improved margin of 33.3%, up 220bps compared to June 2019.

Efforts made in online fulfilment practices have been beneficial with online sales increasing by 160% and click-and-collect sales growing by 150% over the prior year period.

Expenses were well managed and efforts made in cost saving initiatives continue to reap benefits. Expenses decreased by 3.1% during the period, and by 1.5% on a comparable basis.

One Builders Superstore was closed in South Africa during the period, resulting in a 0.2% decrease in trading space to 477,530m².

Post the reporting period, a Builders Warehouse store was opened in Kenya on 20 August 2020.

Cambridge and Rhino total sales of R3.9 billion declined by 15.6%, and by 14.5% on a comparable store sales basis. Product inflation was 6.5%. Sales were further impacted by store closures during the period due to positive Covid-19 cases and store sanitisations. Lost sales from the Covid-19 pandemic impact is estimated to be R0.4 billion.

Increased commodities and retail sales and optimising product and promotional mix with the EDLP proposition led to an improvement of 110bps in margin to 17.3% compared to June 2019.

Continued focus on working capital initiatives led to minimal stock obsolescence and stable stock aging. Expenses decreased by 2.9% and by 1.6% on a comparable basis. Impairments relating to loss-making stores were also recognised during the period.

One Cambridge store was opened in South Africa during the period, resulting in an increase of 1.6% of trading space to 108,205m².

Makro total sales of R12.0 billion decreased by 10.4% compared to June 2019, with comparable stores sales contracting by 11.0%. Product inflation was 3.6%, and margins improved by 70bps to 18.2% compared to June 2019. Lost sales from the Covid-19 pandemic impact is estimated to be R1.9 billion.

Shifting consumer patterns emerging from the lockdown led to an increase in retail customers, and a reduction in wholesale and commercial customers. Makro also partnered with OneCart during the period further enabling the sale and delivery of over 11,000 grocery items and 124 liquor items. Online sales increased by 84% during the period.

Expenses were well managed despite increased bad debts (mainly from the liquor and hospitality industries), stock obsolescence and increased IT costs related to the Hybris web and fulfillment platform. Expenses increased by 1.6% during the period, with the same increase in comparable expense.

There were no stores opened nor closed during the period and trading space remained at 246,125m².

Cash & Carry total sales of R9.5 billion declined by 2.1%, and similarly on a comparable store sales basis. Product inflation was 6.5%. Sales from the rest of Africa stores increased by 0.6% and declined by 2.3% in constant currencies. Sales were impacted by the significant reduction of hospitality and commercial consumers, which also led to an increase in bad debts. Lost sales from the Covid-19 pandemic impact is estimated to be R0.4 billion.

Optimising product and promotional mix from the EDLP proposition and shelf-pricing improvements led to improved margins of 80bps to 10.9% compared to June 2019.

A focus on expense management and cost saving initiatives were realised in travel and consulting fees. Expenses increased by 2.7% during the period, with a similar increase in comparable expenses. Certain loss-making stores resulted in impairments expenses during the period.

There were no stores opened nor closed during the period and trading space remained at 282,264m².

* Restated according to the new operating structure of the Group as required by IFRS 8. Refer to note 2.
^ Business Unit trading (loss)/profit includes Corporate allocations.