By Jackie Cameron
In today’s news headlines:
- On the Johannesburg stock exchange on Thursday, Massmart and Brait took a big hammering, each plummeting about 13%. Massmart announced on Thursday that it had hired an American heavy hitter, Mitch Slape, as CEO. Two weeks ago, CEO Guy Hayward announced he was standing down. Slape is described as a Walmart old hand, but his retail credentials – which include heading Walmart’s Indian chain and heading all international mergers and acquisitions – have not been enough to persuade investors that Massmart’s near term future looks bright. The Massmart share price hit a 10-year low on news that its headline earnings may be at least 50% lower than a year before. Massmart was bought by US retail giant Walmart in 2011 to tap into an expected rise in consumer spending in Africa. It owns Builders Warehouse, Makro, Game, Jumbo Cash and Carry and Dion Wired. Massmart bosses do not expect consumer sentiment in South Africa to improve anytime soon. Slape, 51, will move to Johannesburg when he has been granted a work permit, Massmart said. The shares were trading around R68.
- Brait’s share price hit a 7-year-low on news that the net value of its assets has fallen sharply. The investment holding company, listed in Johannesburg and Luxembourg. Brait said it had reduced the respective valuation multiples applied at 31 March 2019 for Virgin Active, Premier and Iceland Foods. Brait is expected to release financial results in mid-June 18.
- There was another development in President Cyril Ramaphosa’s strategy to root out corruption in government yesterday when Deputy President David Mabuza asked to delay his swearing in. Mabuza has been accused of corruption and there are allegations that he has links to violent crimes. Mabuza’s role as deputy president is in doubt now. As reported on BizNews, under the constitution, President Ramaphosa’s deputy must be selected from among the ranks of the 400 lawmakers in the National Assembly. This means Mabuza could be disqualified from the position if he doesn’t clear his name in the next few days.
- Multinational Steinhoff is back in the international headlines. It faces a mass investor lawsuit in Germany. Steinhoff is already caught up in multiple legal battles in connection with irregular accounting. It has been teetering on the brink of collapse since late 2017, when its CEO Markus Jooste stepped down amid allegations of financial irregularities. Bloomberg reports that a Frankfurt court has received 10 law suits, the minimum amount to allow cases to be heard jointly under a special group litigation procedure. Investors are seeking compensation for losses they say were caused by Steinhoff’s accounting scandal. Steinhoff lost about 5% on the Johannesburg stock exchange on Thursday, and was changing hands at R1.35/share by the end of the day.
- The rand closed at R14.47 to the US dollar on Thursday. The SA Reserve Bank also announced earlier that interest rates would remain unchanged at 6.75%.
