Home Business and Technology Game stores set to cut around 1 800 jobs due to massive...

Game stores set to cut around 1 800 jobs due to massive financial losses

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game stores

The South African Commercial Catering and Allied Workers Union (SACCAWU) has received a letter from Walmart-owned retailer Massmart – which owns Game stores in South Africa – notifying them that they are set to try and cut 1 800 jobs from their roster.

The group have said that despite numerous interventions that aimed to mitigate the enormous losses of R675 million reported in December 2019, job cuts remain an unfortunate necessity.

GAME CONTRIBUTING TO MASSIVE MASSMART FINANCIAL LOSSES
The group said in a letter to shareholders on Tuesday 7 July that the financial losses currently being suffered by the group, which also owns Makro, Dion Wired, Builders Warehouse and Masscash, continued to necessitate hard decisions.

“You will be aware that mass discounters has under performed for a number of years,” the group said.

“As recently as December 2019, Mass discounters recorded a financial loss of R675 million, of which the loss attributed to Game was R572 million. This has impacted negatively on our overall Group performance and was a significant contributor to the operating loss that Massmart announced in March 2020.”

Game has implemented the following strategies in an effort to return the business to a profitable status:

Implementing a new customer focused group operating model;

  • delaying investment in certain projects;
  • negotiating lower store rentals;
  • improving supplier payment arrangements; and
  • reducing expenditure.

JOB CUTS ‘NOT WHAT ANY OF US WOULD PREFER’
The group said that while these actions have “delivered value that has stabilised and improved the overall health and prospects of our business”, more still needs to be done, meaning that now 1 800 jobs are on the line as the group begins formal consultations with organised labour.

“The Game Section 189 announcement is focused on proposing a more resilient store-operating model that we believe will contribute significantly to returning the Game business to profitability, which should ultimately result in greater job security,” they said.

“We anticipate that, if adopted, this proposed operating model might result in approximately 1 800 potential job losses in our South African stores.”

“I understand that taking action of this kind, particularly during these uncertain times, is not what any of us would prefer and I am truly sorry that we are in a position where we have to consider actions that might result in potential job losses in order to return Game, and the Group as a whole, to profitability.”

Massmart also announced in March that they would be closing 23 Dion Wired stores as well as a number of Masscash stores. The group commands a fleet of almost 450 stores across 13 countries in sub-Saharan Africa and about 48 500 full-time employees.

southafrican.com