SOUTH AFRICA – Retailer Massmart reported a 25.2% fall in half-year profit on Thursday as debt-laden consumers battling rising living costs cut back on spending.
Massmart said diluted headline earnings per share totalled 166.4c in the six months ended June compared with 222.6c a year earlier.
Sales rose 10% to R35.7bn ($3.36bn) for the 26 weeks ended June 29.
With the exception of Game SA, the group achieved most of its objectives. Two divisions — Massbuild and Masscash — grew trading profit ahead of sales, while Makro’s growth in trading profit was slightly below sales growth due to new stores in the year-earlier period.
Massdiscounters was compromised by continued soft sales in Game SA, resulting in significantly lower trading profit compared with the year-earlier period.
Higher net interest paid from funding several property acquisitions and an adverse movement in foreign exchange resulted in headline earnings decreasing by 25.5%, while headline earnings declined by 5.7%, excluding foreign-exchange movements, the group said.
Total operating expenses (excluding foreign-exchange movements) increased by 11.3%, with comparable operating expenses increasing by 7.7%. Employment costs, the group’s largest cost category, increased by 12.9%.
Retailers are among the worst-performing stocks in Johannesburg over the past 12 months, reflecting investor fears about the impact of tepid economic growth, rising fuel prices and high household debt on consumer spending – With Reuters