Walmart’s Massmart subsidiary has offered a profit warning for its most recent fiscal half, sending shares in the group slumping by 18% on Thursday.
Massmart said it expects to incur restructuring charges of up to 300m rand as it relocates its Game and Masscash head offices from Durban to Johannesburg, with the charges being pushed up by the decision of some staff to leave rather than relocate.
The group said this could result in headline earnings per share for the six months ending 30 June 2018 falling by 58%-68%, However, even excluding restructuring costs, headline earnings per share are now expected to decline 36%-46%, highlighting the tough market conditions.
CEO Guy Hayward added: “Whilst the positive impact of SA’s political renewal has been good for business confidence, there is little sign currently of any economic recovery among our lower-and middle-income consumers”.
Massmart also noted that for the first 19 weeks of the current fiscal year, sales grew by just 0.8% to 31.4bn rand, with like-for-like sales declining by 0.5%. Food sales declined by 2.3%, but Liquor sales rose by 6.9%, Durable Goods edged up 0.2%, and Home Improvement sales were up 6.1%.
