By Janice Kew and Roxanne Henderson
(Bloomberg) – Massmart Holdings Ltd. is looking to a new chief executive officer to help arrest a slump even as the South African retailer controlled by Walmart Inc. sees a further deterioration in the nation’s consumer environment.
The household goods specialist reported total sales of R43.8bn ($2.8bn) in the six months through June, up 5.5% from a year earlier, reporting a net loss of R836m from a year-earlier profit, the Johannesburg-based company said in a statement on Thursday.
With no catalyst to revive a moribund South African economy, Massmart expects full-year earnings to drop at least 50% from a year earlier.
Key insights
- Mitchell Slape will start as new CEO next week after Massmart in May said the 24-year Walmart veteran would be in charge of leading a turnaround. The Johannesburg-based company cut its full-year dividend by 40% earlier this year and scrapped its interim dividend because of the loss.
- Some analysts have questioned if Walmart may even pull out of South Africa, as the country is one of the global retailer’s most vulnerable markets. Walmart bought a majority stake in Massmart in 2011 for R16.5bn and has also reported hurdles in China, India and the UK.
- It’s certainly not easy for any of the South African retailers as the continent’s most-industrialized economy battles with stubbornly high unemployment and consumer confidence that’s been dented by rising taxes, fuel costs and other bills.
Market reaction
- Massmart’s shares have slumped 62% this year, the most of the 13 stocks on the FTSE/JSE Africa General Retailers Index. The stock fell the most since at least 2000 on July 30 after reporting a first-half loss.
