TRUWTHS: 7,260 -238 (-3.17%)
South Africa's Massmart hit by lower sales, earnings warning
JOHANNESBURG, Jan 22 (Reuters) - Shares in Massmart Holdings
Ltd fell more than 21 percent on Tuesday after the
South African retailer posted lower-than-expected full-year
sales and said it expected its headline earnings to drop by up
to 44 percent.
An increase in value-added tax, unemployment and inflation
levels, coupled with higher fuel prices have reduced spending
power in South Africa, causing slower sales and pointing to a
gloomy outlook for the retail sector results season in February.
Massmart, which sells general merchandise, fresh food,
groceries, home improvements and appliances, said it expects
headline earnings per share (HEPS), which includes restructure
costs, for 2018 to fall between 34 and 44 percent from the 688.1
cents reported in 2017.
Massmart shares were down 18.65 percent to 93.30 rand at
1452 GMT, which would be the biggest daily fall in the stock in
nearly nine-months if they close at this level.
Group sales fell 3 percent to 90.9 billion rand ($6.55
billion) as sales growth in all divisions, except discount
retailer Game and DionWired, slowed during the crucial November
and December shopping months in the 52-week period. Compared to
2017, which had 53 weeks, sales are up 2.9 percent.
Nine analysts polled by Refinitiv expected sales to inch
0.11 percent lower.
The trading update followed flat half-year sales from
supermarket operator Shoprite.
Last week Thursday Woolworths and budget clothes
retailer Mr Price Group also reported slower sales
growth, while clothes retailer Truworths said it
expected diluted HEPS to drop between 5 and 7 percent.
($1 = 13.8729 rand)
(Reporting by Nqobile Dludla
Editing by James Macharia)
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