Massmart Holdings Ltd. (MSM), the South African food and goods wholesaler owned by Wal-Mart Stores Inc. (WMT), said sales growth slowed during the first half of the year amid a downturn in consumer spending.
Sales advanced 8.9 percent to 32.37 billion rand ($3.1 billion) in the 26 weeks through June 23, the Johannesburg-based company said in a statement today. That compares with a 15 percent increase in the six months through December 23. Earnings per share excluding one-time items and foreign-exchange gains fell 9.4 percent to 392 million rand.
“Disposable income levels are fragile,” Chief Executive Officer Grant Pattison said in the statement. “Total retail capacity needs to be reduced, competition for market share will increase, and new avenues for growth need to be found.”
Massmart, which owns the cash and carry chain Makro and DIY specialist Builders Warehouse, said sales would continue to be under pressure for the remainder of the year and most of management’s focus will be on maintaining market share and reducing costs. The company, in which Bentonville, Arkansas-based Wal-Mart Stores Inc. has a controlling stake, maintained the half-year dividend at 146 cents a share.
South African retail sales rose at the slowest pace in eight months in June as flagging economic growth and rising joblessness curbed consumer spending. The unemployment rate climbed to 25.6 percent in the second quarter from 25.2 percent in the previous three months, as the labor force expanded and the retail, finance and construction industries cut jobs.
Massmart said on Aug. 13 its earnings per share excluding one-time items and foreign-exchange gains decreased 3.9 percent to 15 percent in the 26 weeks through June 23, sending its shares to the lowest in two years. The stock fell 2.2 percent to 154.78 rand by the close in Johannesburg yesterday, increasing this year’s decline to 19 percent.
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