Massmart slides while Woolies steadies; Phuthuma Nathi bonanza; August stock blues; Unions torch Tito plan

By Linda van Tilburg

  • Massmart, the owner of Makro, Game and Builders Warehouse is pinning their hopes on a new CEO, Mitchell Slape to stop the slide at the Walmart-controlled retailer. The company reported a headline loss of more than R500m in the six months ending in June. Massmart expects full year earnings to drop by at least 50% from a year earlier as economic conditions in cash-strapped consumers curb spending.  Masmart’s reported total sales were R43.8bn in the six months up to June. Massmart shares fell by more than 3% on the JSE yesterday.
  • Full-year earnings from Woolworths showed signs of improving performance. Profits came in just below the mid-range of guidance according to Henre Herselman, a derivatives trader from Anchor Private Clients. Herselman said investors were probably expecting the worst but ended up not being the case. Bloomberg reports that a pick-up in food sales and news that its clothing business had turned the corner, fuelled optimism for Mr Price and other retailers. Woolworths gained as much as 5.7% in five weeks and Mr Price climbed by 2.7% in the same period. In Australia where Woolworths has been forced to write down the value of its David Jones department store business, the company is starting to turn around by reducing floorspace, refurbishing a flagship Sydney store and partnering with BP gas stations. Woolies shares gained more than 4.11% yesterday on the JSE, while Pepkor and Mr Price also rose by more than 2%.
  • August is turning out to be the worst month for South African stocks since 1998 due to the trade hostilities between China and the United States of America. Johannesburg’s benchmark index has fallen by 4.4%. General retailers lost 7% and bank stocks plummeted 6.9%. But Bloomberg reports the picture could have been worse, the benchmark index has been propped up by gains in rand-hedge stocks benefitting from the Rand’s 6.4% retreat against the dollar this month. It has also been the best month for gold shares since February 2016, as nervous investors look for a safe haven in bullion.
  • Well, it has not been a bad month for black shareholders of MultiChoice South Africa, who will be smiling as they are benefitting froma  declared dividend to Phuthuma Nathi shareholders. It represents an increase of 13.6% from 2018. The additional 5% share allocation given to Phuthuma Nathi, as part of MultiChoice Group’s listing, contributed to the increase in dividend declared. The company said the Phuthuma Nathi scheme had been running for about 13 years and they were proud that they were able to share their success with thousands of black South Africans.
  • Cosatu has rejected the Treasury growth plan unveiled by Finance Minister Tito Mboweni earlier this week, saying the strategy made the government appear “incoherent, confused and unreliable.” They also demanded that the paper be withdrawn immediately. Cosatu has written to the ANC to complain about a lack of consultation on the plan and the ruling party’s failure to convene regular meetings with its union allies. But the country’s biggest property and casualty insurer Santam, has backed Finance Minister Mboweni saying it was a step in the right direction. CFO Hennie Nel said the positive message was that there was a plan which can be discussed and talked about.