HALF-YEAR UPDATE
Massmart gives notice of 26% drop in profits
Massmart has warned investors that half-year profits are expected to decline by 26%. On Monday, the group owned by US retailer Walmart said it expected half-year headline earnings per share — excluding restructuring costs at Massdiscounters and Masscash — of 124.7c to 141.5c, down from a restated 168.5c a year earlier. Alec Abraham, senior equity analyst at Sasfin Wealth, said, “The reality is that Massmart operates a high-volume, low-margin business model in a steadily rising inflation environment. But what we have seen is quite the opposite. We have seen low volumes coming through from them, we’ve seen deflation in a number of their categories. It’s been very difficult in that environment,” he said. Earnings for the six months to June, including restructuring costs, are expected to fall by as much as 50% to about R184.7m. Analysts have raised concerns about Walmart’s growth strategy for Massmart. Thabiso Mamathuba, an investment analyst at FNB Securities, said the last few years w...
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