Massmart stock dips as sales disappoint

Massmart stock dips as sales disappoint

FMCG SUPPLIER NEWS

Business Day - May 9th 2012, 07:52

Markets were disappointed by Walmart-controlled Massmart ’s sales update released yesterday, with its shares falling as much as 2,5% to reach their lowest level in almost a month. 

Sales for the 44-week period to April 29 rose 14,7% to R51,7bn from the previous period, said the company, which is 51% owned by the US retailing giant.

Comparable store sales grew 8,9%, while inflation for the period is estimated at 1,4%.

The performance was disappointing, said Ryan Wibberley, an equity dealer at Investec Asset Management. "Markets were expecting something closer to 16%," he said.

Massmart’s stock fell for a second day, ending the day 2% lower at R164,20, its lowest since April 10. The performance was in line with an overall weaker JSE, which was down 1,2% on continued concern over the global economy.

For the 26 weeks to December 25, Massmart reported sales growth of 15%.

In a similar period, its rival Shoprite recorded 13,2% growth.

Walmart’s bid for a controlling stake in Massmart was inspired by the retailer’s hopes of using SA as a stepping stone into the rest of Africa, countering slow growth in the US. In its domestic market, Walmart reported a revenue rise of 1,5% in the year to January.

As part of its strategy to increase its African footprint, Massmart also announced board changes yesterday.

CEO Grant Pattison will have the task of focusing on local and African growth priorities, including the implementation of Massmart’s retail food strategy.

Other board changes included shifting Guy Hayward, who had been chief financial officer since 2001, to the role of chief operating officer, Massmart said. Ilan Zwarenstein, group finance executive since 2006, assumes the role of financial director, and will be appointed to the board and the Massmart executive committee.