* To open 10 to 15 stores outside South Africa
* Headline EPS before forex gains at 181 cents vs 201 cents
* Sees tough second half
By Tiisetso Motsoeneng
JOHANNESBURG, Aug 22 Wal-Mart's South
African unit, Massmart, reported a 10 percent fall in
first-half profit on Thursday hurt by a weak market and slow
expansion into other African countries.
Massmart - and clothing retailer Truworths, which
also reported results - are among a growing number of South
African companies to signal concern about anemic consumer demand
in the continent's top economy.
Given South Africa's dismal growth prospects, investors are
keen to see evidence of retailers expanding into fast-rising
But Massmart has been slow to deliver, losing ground to
domestic rival Shoprite which on Wednesday laid out an ambitious
plan to open 47 stores outside of South Africa.
Shares in Massmart, which are down about 20 percent this
year, were down 2.9 percent to 150.17 cents at 1354 GMT,
underperforming a slightly higher JSE Top-40 index.
"We want to slightly shift our focus away from South Africa
and put more resources into African growth," Chief Executive
Grant Pattison said at the company's presentation of first-half
Massmart, 51 percent-owned by the world's biggest retailer,
said all but 10 to 15 stores to be opened over the next three
years would be in South Africa.
Analysts said Massmart's expansion could be quicker if key
markets such as Nigeria had modern shopping infrastructure for
its flagship Game stores.
"If Massmart considers smaller, standalone stores they would
probably expand faster," said Patrick Ntshalintshali, a
portfolio manager at Vunani Fund Managers.
Massmart runs 29 stores in 11 African countries outside
South Africa which contribute about 8 percent to its total
Rival Shoprite, by contrast, runs 153 supermarkets and could
double that number in three to four years, Chief Executive
Whitey Basson said this week.
Massmart could also boost presence on the continent with
acquisitions but Pattison said there were few retailers that
would fit into its stable.
He declined to comment on news that Massmart is looking to
take a controlling stake in Kenyan supermarket chain Naivas, a
deal which could double its foreign outlets.
Massmart, which sells everything from groceries to
televisions, said headline earnings per share fell 9.9 percent
to 181 cents in the first six months of the year.
Headline EPS, South Africa's primary profit gauge, excludes
certain one-off items.
Massmart said favourable currency swings added 134 million
rand ($13.09 million) to the bottom line, causing headline EPS
to increase by 52 percent.
Sales increased 8.9 percent to 32.4 billion rand and the
company maintained its dividend payout at 146 cents per share.
"There's little on the macro-economic horizon that suggests
any improvement," said Massmart. "We believe the remainder of
the year will continue to see sales under pressure."
Separately, Truworths, South Africa biggest listed clothing
retailer, reported an 8 percent rise in full-year profit
Thursday but warned that debt-laden consumers might reduce their
South African retail sales grew by a smaller-than-expected
1.9 percent in June, government statistics showed last week.