Massmart Holdings Ltd. (MSM), the South African food and general goods retailer controlled by Wal-Mart Stores Inc (WMT), reported full-year profit that missed estimates, as its Game chain of shops struggled to sell household goods.
Net income rose 32 percent to 1.28 billion rand ($118.5 million) from 972.3 million rand a year earlier, the Johannesburg-based company said in a statement today. That was lower than the 1.32 billion rand average of 10 analyst estimates compiled by Bloomberg.
“Given the hardening middle-income environment, Game South Africa’s comparable sales showed a decline of 2.6% which caused severe pressure on profitability,” Chief Executive Officer Grant Pattison said in the statement.
South African retailers have been struggling over the past year as high unemployment and inflation hurt consumer spending, with lower-income to middle-income earners particularly vulnerable. Retail sales growth declined to 3.5 percent in December compared with 4.4 percent the previous month.
Massmart sales climbed 9.8 percent to 72.3 billion rand in the 53 weeks ended Dec. 29. The company lost about 200 million rand of revenue because of store closures on Dec. 15, the day of former South African president Nelson Mandela’s funeral, or 0.3 percent of full-year sales, Massmart said Jan. 15.
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