Written by
Faridah N Kulumba
Africa-Press – Kenya. South African Retail giant Massmart that operates the Game Store on 27 August 2021, announced its plan to sell its store in Kenya, Uganda and Tanzania, making the latest of a string of retreats from East Africa by a southern African firm.
The Johannesburg Stock Exchange -listed retailer, put up 14 Game stores in East Africa and West Africa for sale, citing need to focus on its “core strength” after the Walmart (WMT.N) majority-owned retailer reported a narrower half-year loss.
The chain had begun a formal sales process to divest in five Game stores in Nigeria, four in Ghana, three in Kenya, one in Uganda, and one in Tanzania.
Massmart, majority-owned by American super chain Walmart, made its debut in Kenya with Game Stores in 2015 with its first store at the Garden City Mall, to cash in on the growing demand for retail outlets in the country. It subsequently opened two other stores at the waterfront in Karen and the Mega City Mall in Kisumu.
Spark of Closure
According to Massmart chief executive Mitch Slape the Walmart Owned retailer like its peer Shoprite Holdings(SHPJ.J) forays into African markets including Nigeria have been marred by currency volatility and constrained consumer demand, making it difficult to operate profitably on the continent once touted as the next bright growth spot for retailers.
The exit plan ends a five-year stint for the Sandton-headquartered retailer in Kenya and further extends the poor run by South African retailers and companies who have faced headwinds trying to crack the local market.
What next?
Through the disposal of non-core and underperforming assets and store closures, Massmart hopes to sharpen management’s focus and invest in high returning assets and online.
The move will result in an annual profit before interest and tax improvement of 750 million rand ($50.24 million)
The company is hoping to break even in the next 12 months as revealed by group chief financial officer Mohammed Abdool-Samad.
However the company did not disclose the details, including the value of the transactions and the identity of the potential buyers, which are still subject to negotiations.
losses
Game store sales from the rest of the Africa stores fell by 18.6% in rand terms in the 26 weeks ended June, and by 5% in constant currencies, due to continued currency weaknesses, Massmart with presence in 12 African countries.
In the period Game reported a narrower trading loss of 347.3 million rand.
Through additional lower overheads, reduced Africa exposure and possible further store closures or disposals, Game will be in a break-even position, before getting back to a healthy level of profitability and performance.
Game stores are fashioned as discount shops that sell fast-moving consumer goods (FMCG) and non-perishable groceries through over 100 outlets in over a dozen African countries.
