Massmart Holdings Ltd. (MSM), the South African food and general goods retailer controlled by Wal-Mart Stores Inc. (WMT), expects sales growth to remain subdued as the economy slows and rising inflation weighs on consumers.
Massmart’s comparable or same-store sales increased by 5.6 percent in the first 21 weeks of fiscal year 2013, the company said in a statement today. That compares with 7.3 percent growth in the second half of 2012. The financial year-to-date sales inflation was 3.1 percent.
“The decline in comparable sales growth has been evident in all product categories and across all South African geographies,” Chief Executive Officer Grant Pattison told investors at the company’s annual general meeting in Johannesburg. “We anticipate that comparable sales growth will remain soft for the remainder of the financial year.”
Massmart shares fell as much as 2.2 percent to 199.56 rand by 1:42 p.m. in Johannesburg, paring gains for the year to 4.5 percent.
South Africa’s inflation rate remained unchanged at 5.9 percent in April as a decline in the value of the rand added to the cost of imports. The South African Reserve Bank’s monetary policy committee said in March it expects inflation to exceed 6 percent, the top of its target range, in the third quarter. Rising inflation increases the price of goods for the consumer, weighing on retail sales.
Massmart, which owns the cash and carry chain Makro and DIY specialist Builders Warehouse, is expanding in Africa to offset slower growth in its domestic market.
“Massmart will continue to expand its store network in sub-Saharan Africa,” Pattison said. The company will open 27 stores before the end of 2013, including a Makro in Amanzimtoti, Durban, and a Builders Warehouse store in Botswana and Mozambique. he said.
The company was able to buy seven Makro properties that were previously lease-held after receiving a loan from parent company Wal-Mart, he said.
To contact the reporter on this story: Amogelang Mbatha in Johannesburg at firstname.lastname@example.org