Game and Makro owner bleeds from lost sales under lockdown – News24

Game and Makro owner bleeds from lost sales under lockdown – News24
The owner of Game stores, Marrsmart, has reported a R1.2 billion loss for the first half of 2020.

The owner of Game stores, Marrsmart, has reported a R1.2 billion loss for the first half of 2020.

  • Massmart has reported a R1.2 billion loss for the six months ended June 28.
  • The retail giant, which owns Game and Makro, says it could not sell products that account for about 56% of its total sales during the initial hard lockdown.
  • While trading restrictions have since eased, Massmart says its sales to mid-August 2020 still represent a decline of just over 10%. 

Massmart’s loss has widened to R1.2 billion in the first six months of 2020 due to tough trading restrictions under the nationwide lockdown and retrenchment costs associated with the closure of some of its stores.

On Thursday, the owner of Game and Makro reported that it recorded a R1.2 billion loss for the 26 weeks to end June, up from a loss of R0.8 billion in 2019, as costs for keeping its stores running rose while sales declined by 9.7% R39.6 billion.

The group’s headline loss – a measure of profitability that excludes some once off items to focus on trading activities – stood at R1.1 billion, also rising from a loss of R0.8 billion during the same period last year.

Sales in South Africa decreased by 10.6%, while sales in its operations in rest of Africa only showed a decline of 0.1%, or 3.8% in constant currencies.

Over and above the poor trading numbers, Massmart reported additional costs for closing DionWired stores, while it was also forced to impair certain Game, Cambridge and Wholesale Cash & Carry stores.

During the six months, Massmart also incurred additional employment and operating costs of f R76.2 million related to keeping its stores safe for employees and customers

Massmart said its sales were hardest hit during the initial country’s initial five-week strict lockdown, when it couldn’t sell goods like general merchandise, home improvement items, or liquor and tobacco. During Level 5 of the lockdown its South African Builders stores were not permitted to trade. The categories of goods that the retail giant could not sell during this period contributed approximately 56% of its total sales over the same period in 2019.

While trading restrictions have eased, Massmart said total sales for the 33 weeks to 16 August 2020 still represent a 10.5% decline.

“We expect the uncertain operating environment and negatively impacted economy related to the Covid-19 pandemic to persist. While trade in all our categories is currently permitted, future Covid-19 related trading restrictions remain uncertain,” wrote the retail group in its results booklet.

Massmart added that it is confident it will be able to navigate this Covid-19 uncertainty and it will look to accelerate the implementation of its turnaround plan, which includes, among other things changes in the offerings at Game stores and ditching the fresh food section in favour of cheap clothing.

UPDATE: The headline was changed from ‘Game and Makro owner bleeds from shrinking sales and rising costs’ as losses were mostly attributable to lost sales caused by the lockdown restrictions.

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