Divisional Review

Massdiscounters

Massdiscounters comprises 80 retail discount stores, trading as Game (70 stores) in South Africa, Namibia, Botswana, Zambia, Uganda, Mozambique, Nigeria and Mauritius, and as Dion (10 stores), which trades only in the Gauteng province of South Africa. These stores offer a wide range of general merchandise and non-perishable groceries to the value-seeking customer.


  • Sales of R8 billion show 11.0% real growth
  • Profit before tax of R576 million exceeds the 7.0% medium-term target
  • Eight stores opened in South Africa and one in Lagos, Nigeria
  • Total trading space of 322 291 m2

Overview

Massdiscounters comprises retail general merchandise discounters Game (70 stores), which trades in South Africa, Namibia, Botswana, Zambia, Uganda, Mozambique, Mauritius, and Nigeria, and Dion (10 stores), which trades in the Gauteng province of South Africa. Divisional comparable store sales grew 2.1% despite estimated deflation of 1.5%.

New store development was aggressive throughout the year. The Africa portfolio was increased to nine with the opening of a new store in Nigeria, two large Game outlets were opened in George and Vanderbijlpark and six new small-format Game stores were opened in Makado, Shelley Beach, Wonderpark, Ermelo, Worcester and Ladysmith. In addition two stores were refurbished. Initially lacklustre comparable store sales growth responded well to aggressive merchandise and marketing initiatives in the second half to register a 7.3% growth in the final quarter.

Excellent expense and working capital control, and a R17.6 million positive foreign exchange movement, enabled the division to grow trading profits well ahead of sales growth. In the core categories of appliances, home electronics and computers, sales growths substantially exceeded those reported by major competitors.

With a trading profit return on sales of 7.2%, the division has exceeded its medium-term target of 7% moving closer to its international benchmark of 7.4%.

Prospects

Innovative store design, aggressive marketing and effective merchandising continues to position Game as Southern Africa’s leading general merchandise discounter, with Dion playing an important role in maintaining market share in the densely populated Gauteng province.

Careful market research suggests that there remains opportunity for new large Game stores in South Africa and in Africa. In addition, as a result of the improved operating efficiency of Game in recent years, new small-format Game stores, measuring around 3 000 m2, have now become viable in smaller previously unattractive markets. The closure and relocation of selected stores will optimise penetration within the Chain’s target market, leading to higher sales per store and significantly higher Chain profitability

During the 2007 financial year, five more small-format stores will be opened in South Africa and large Game stores will be opened in Soweto and on the East Rand as well as three more Game stores in Malawi, Tanzania and Ghana.