Saturday , June 10 2023

Massmart hit by lower sales, earnings warning


Shares in Massmart fell more than 21% on Tuesday after South African retailer posted lower-than-expected full-year sales and said it expected its headline earnings to drop by up to 44%.

South Africa, which has slashed spending power, has been making slower sales and pointing to a gloomy outlook for the retail sector results in February.

Massmart, which sells general merchandise, said it expects headline earnings per share (Heps), which includes restructure costs, for 2018 to fall between 34% and 44% from the 688.1 cents reported in 2017 .

Massmart shares were down 18.65% to R93.30 at 1452 GMT, which would be the largest daily fall in the stock in almost nine-months if they close at this level.

Group sales fell 3% to R90.9 billion ($ 6.55 billion) as sales growth in all divisions, except discount retailer Game and DionWired, slowed during the critical November and December shopping months in the 52-week period. Compared to 2017, which had 53 weeks, sales are up 2.9%.

Nine analysts polled by Refinitiv expected sales to inch by 0.11% lower.

The trading update followed by a half-year sales from supermarket operator Shoprite.

Last week, the price index also reported a 5% and 7% drop in Heps to drop.

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