Massmart Hit By Lower Sales, Earnings Warning
Massmart posted lower-than-expected full-year sales and says it expected its headline earnings to drop by up to 44%.
Shares in Massmart fell more than 21% after the South African retailer posted lower than- expected full-year sales
and said it expected its headline earnings to drop by up to 44%. An increase in value-added tax, unemployment and inflation levels, coupled with higher fuel prices have reduced spending power in South Africa, causing slower sales and pointing to a gloomy outlook for the retail sector results season in February.
Massmart, which sells general merchandise, fresh food, groceries, home improvements and appliances, 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 biggest daily fall in the stock in nearly 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 crucial 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 0.11% lower. The trading update followed flat half-year sales from supermarket operator Shoprite.
Article By Ngobile Dludla, Reuters.