Divisional operational review


Comprises the 114-store General Merchandise discounter and Food retailer Game, which trades in South Africa, Botswana, Ghana, Lesotho, Malawi, Mozambique, Namibia, Nigeria, Tanzania, Uganda and Zambia; and the 19-store Hi-tech retailer DionWired.

Divisional comparable sales increased by 2.6% with product inflation of 0.8%. Total sales increased by 7.7% but disappointingly trading profit before tax decreased by 14.8% as Game South Africa’s comparable sales growth slowed to 1.0%. Game Africa and DionWired performed well however, with profit increasing well ahead of sales in both businesses. Game Africa’s total Rand sales increased by 8.7% and by 9.2% in local currencies.

Foodco continues to expand with 27 stores now in the format (including five in Africa), and is performing at or above expectations. Significantly the final and Durban-based Regional Distribution Centre (RDC) was commissioned which now completes the national network. Whilst these facilities are expensive in the short-term, they provide a significant opportunity for positive operational and trading leverage in the medium- to long-term.

In January 2013, Massdiscounters’ CEO, Jan Potgieter, resigned. Jan was with Massdiscounters for eight years, six of them as CEO and we thank him for his contribution to the growth and development of the business. Robin Wright is acting CEO.

Seven Game stores and one DionWired store were opened, increasing space by 23,952 m² (5.8%).

Click to enlarge Operating review


Comprises the 18-store Makro warehouse-club trading in Food, General Merchandise and Liquor in South Africa; and Fruitspot.

Divisional comparable sales increased by 8.6% with product inflation of 3.4%. Total sales grew by 23.5%, boosted by the five new store openings since September 2011, and trading profit before tax increased by 12.7%. Despite the anticipated higher cost levels from the new stores, including pre-opening costs of R28.2 million (2011: R34.8 million), Makro is trading strongly and remains well managed. Growth in trading profit before interest for Makro’s comparable stores was in line with their rate of sales growth for the period.

In September 2012, Doug Jones became MD of Masswarehouse following Kevin Vyvyan-Day’s move to Cambridge in Masscash.

Two stores were opened, increasing space by 24,847 m² (17.0%).


Comprises 85 stores, trading in DIY, Home Improvement and Builders Hardware, under the Builders Warehouse, Builders Express and Builders Trade Depot brands in South Africa and Botswana.

Divisional comparable sales increased by 9.7% with estimated product inflation of 2.7%. Total sales increased by 10.0% and trading profit before tax increased by 23.6%. The strong financial performance reflects the superb efforts of management and employees to: improve customer service; optimise merchandise levels; merchandise innovatively; and control expenses.

Builders Warehouse and Builders Express continued to transform the South African Home Improvement market. Builders Trade Depot’s performance improved but sales remain soft given the tepid South African residential housing market.

In its second year of operation, Builders Warehouse Gaborone is performing ahead of expectations. During 2013 and 2014, we hope to open two stores in Mozambique, one in Zambia and a second in Botswana. In April 2013, we will open our national Distribution Centre (DC) to the north of Johannesburg.
As we have seen with other DCs, in the first year of operation there is a significant adverse expense impact particularly from the lease-smoothing charge.

One Builders Express store was opened resulting in net trading space increasing by 2,084 m² (0.5%).


Comprises 79 Wholesale Cash and Carry and 44 Retail Cash and Carry stores trading in South Africa, Botswana, Lesotho, Namibia and Swaziland; and Shield, a voluntary buying association.

Divisional comparable sales increased by 8.6% with estimated product inflation of 6.4%. Total sales increased by 15.3%, bolstered by the Rhino acquisition in March 2012, and trading profit before tax increased by 19.4%.

This Division traded hard in an increasingly competitive environment. Profitability continues to improve in the Wholesale Division, and in the Retail Division we are beginning to see the positive results of our investments in the prior year in new stores, structures and DC capacity.

Rhino, acquired in March 2012 and now comprising 18 stores, continues to trade well.

In September 2012, Kevin Vyvyan-Day became CEO of Cambridge within Masscash.

One Retail Store and three Wholesale stores were acquired and two new Retail stores were opened, whilst five Wholesale stores and one Retail store were closed. Net trading space increased by 12,462 m² (3.3%).