Game and Makro owner's losses pile up after grim December | Fin24
 
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Game and Makro owner's losses pile up after grim December

Jan 30 2020 10:14
Londiwe Buthelezi

On Thursday morning, Massmart - the Walmart-controlled owner of Game, Makro, Dion Wired and Builders Warehouse - reported a grim trading statement for the past 52 weeks to December 29. 

Massmart's [JSE:MSM] now expects a headline loss of between R1.1 billion and R1.2 billion. In the previous year, it posted earnings of R901 million.

While the Massmart Group as a whole grew sales by 3% to R93.7bn, merchandised sales actually declined in recent months.

"In addition to the material impact of trading disruptions and customer inconvenience caused by aggressive load-shedding in early December, consumers continued to prioritise spending on non-durables overspending on durable goods," Massmart said.

In the second half of 2019, food sales were up 3.3% and home improvement sales gained 1.9% - but general merchandise sales, Massmart's biggest profit generator, fell by 2.6%. 

The company reported "a very strong Black Friday sales performance", but "unfortunately this strong performance did not carry-over into the festive period.

Most local retailers have complained about the same tough trading conditions which include paltry GDP growth, power disruptions, below CPI retail inflation and price deflation for certain products.

The retail group, which last year got a new American CEO, Mitchell Slape, is consulting with workers about‘possible closures of DionWired and some Masscash stores. The decision on store closures has not yet been made.

On Thursday, Massmart warned that the continued loss-making nature of the stores it wants to shut necessitated the impairment of certain fixtures and fittings, inventory and right-of-use lease assets, resulting in possible impairments of between R200m and R250m before tax.

*Update: This article has been updated to clarify that Massmart is still consulting with workers about the possible closures of some DionWired and some Masscash stores. 



 


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