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Massmart slips back despite strong forecast
Massmart slips back despite strong forecast

Massmart slips back despite strong forecast

RETAILER NEWS - Aug 16th 2016, 08:49

MASSMART’s share price was hit by profit-taking on Monday after the retailer released an interim trading statement, in which it said earnings were expected to grow strongly despite a marked slowdown in the local economy. 

At the close of trade on the JSE on Monday, the retailer’s share price was 4.25% down at R146.50, valuing the company at about R33bn. Data from financial solutions provider Iress show that the Walmart-owned company had seen five consecutive weeks of strong gains before shareholders sent the stock lower.

Kagiso Asset Management investment analyst Dirk van Vlaanderen said the market had been kept abreast of sales trends in the Massmart business via the annual general meeting in May, as well as the 26-week update provided in July.

In July the company reported comparable sales growth of 6.4% and a total sales increase of 8.7%.

"(The) trading statement gives an indication of the profitability of the business for the first six months of the year — guiding to an increase in underlying profit before interest and tax versus the previous period."

"This suggests that profit before interest and tax margins are either unchanged from a prior-year level of 2.1% or that they have increased slightly. We believe this is a credible outcome given the heightened cost inflation pressure the business currently faces," said Van Vlaanderen.

In the 26 weeks to June 26, Massmart said, profit before interest and tax rose 8.4%-15.9% from R685.2m in the first half of 2015.

Interim headline earnings per share were expected to grow 12.9%-20.7% compared From DFM Publishers (Pty) Ltd 

Read more about: retail | massmart | economy |

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