* Diluted headline EPS at 321.7 cents vs 407.3 cents
* Sales up 14.7 percent to 36.1 billion rand
JOHANNESBURG Feb 28 Massmart, the
South African unit of Wal-Mart Stores Inc reported a 21
percent drop in first-half profit, hit by costs related to its
deal with the world's biggest retailer.
Massmart, the high volume, low margin retailer that sells
everything from televisions to groceries, said diluted headline
earnings per share totalled 321.7 cents in the six months to
end-December compared with 407.3 cents a year earlier.
Headline EPS, the primary measure of profit in South
African, exclude certain one-off items.
A South African court last year ordered Massmart to double a
planned fund to develop local suppliers to 240 million rand ($27
million) to win regulatory approval for Wal-Mart's acquisition.
Wal-Mart paid $2.4 billion for 51 percent of Massmart.
Excluding that cost, the company said headline EPS would
have shown single-digit growth, reflecting tight margins from an
aggressive cut-price strategy to double market share in food
"As consumer expenditure slowed, we saw increased
discounting amongst most retailers and the inevitable fight to
hold or gain market share," the company said.
Massmart said last week that first-half earnings would
likely drop by as much as 25 percent.
Massmart, South Africa's third-largest retailer by value, is
expanding into food retailing, pitting it against dominant
grocers such as Shoprite and Pick n Pay.
The Johannesburg-based company aims to take its grocery
market share to as much as 20 percent in the next few years from
10 percent now.
Massmart said sales increased 14.7 percent to 36.1 billion
rand ($4.1 billion). It said sales for eight weeks to February
17, increased 11 percent.
"We are concerned that sales growth may be under some
pressure for the remainder of the financial year," the company
($1 = 8.8612 South African rand)
(Reporting by Tiisetso Motsoeneng; editing by David Dolan)