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DionWired Bleeding Money – No Question Why Stores Are Closing

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Luis Monzon
Luis Monzon
Journalist. Reach me at Luis@ITNewsAfrica.com

Massmart JSE-listed South African branch of Walmart and owner of Game, DionWired and Makro stores, reported a $110 million turnaround in its profits in 2019, plunging to a net loss of $55 million. By all accounts and measures applied to retailers, these results up to 29 December 2019 were ruinous, writes Business Insider.

While Massmart reported that their foot traffic in Game stores had increased 4% – which had led to a sales increase of 1.9% – these numbers are nearly negligible in the face as such overwhelming loss. Trading profits are down for the group as a whole by 46%, gross margins dropped to 18.9% (19.5% in the previous year), and expenses grew 10.2%. Compared to the overall growth of sales, a total of 3%.

On Thursday morning, Massmart’s share price free-fell by almost 4% – trading now at less than half its value from last year.

While Makro and Fruit Spot stores saw trading profits of $60 million and $43 million respectively, with Fruit Spot trading at half the size of Makro – Massmart’s Massdiscounter division which rules over Game and DionWired were trading at a loss of $43 million. Masscash, a huge division of Massmart that keeps Shield, Cambridge Food, Jumbo stores, and Rhino trading brands were trading at a loss of over $32 million.

For DionWired, who Massmart announced closure for in January 2020, sales continued to decrease from 2018, being 19.8% lower than that year.

“Expenses increased by 8.7%, with comparable expenses increasing by 6.9%. Included in this were the costs associated with store openings and IT costs expensed. The implementation of the SAP S/4 HANA ERP system is continuing and is expected to be completed during 2020,” quotes My Broadband about DionWired’s woes.

These results now show clearly why DionWired is slated to be closed, as they are bleeding money for Massmart – in its stead, Game is being heavily hinted for the group’s replacement of DionWired’s electronics retail.

Edited by Luis Monzon

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