S.Africa's Massmart FY profit misses estimates

JOHANNESBURG (Reuters) - Wal-Mart's South African unit Massmart posted a 6.1 percent rise in full-year profit, falling well short of expectations as weak selling prices and rising costs weighed.

The nation's third-largest retailer by market value said diluted headline earnings per share were 619 cents in the year to end-June, well-below a 656 cents in Reuters poll of 13 analysts.

Stripping out costs related to Wal-Mart's $2.4 billion takeover of a 51 percent stake in Massmart, headline EPS increased 30.3 cents.

Consumer spending is improving in Africa's biggest economy due to decades-low interest rates and above-inflation wage hikes, but the outlook is uncertain due to high debt levels and chronic unemployment.

South African retail sales jumped 8.3 percent year-on-year May, official data showed, beating the 4.7 percent growth economists had expected.

But Massmart has failed to fully capitalise on improving consumer spending as it spends a chunk of its cash expanding into food retail to take on established players such Shoprite and Pick 'n Pay.

The company was also hit by weak selling prices, which averaged 1.8 percent, and above-average increase in the prices of electricity.

Massmart said sales rose 15.6 percent to 53 billion rand.

Rival Shoprite also missed forecasts with a 20 percent rise to 607 cents in full-year profit on Tuesday, as nagging unemployment and rising debt levels put pressure on consumer spending.

Shares in Massmart are little changed so far this year, underperforming a 10 percent rise in the JSE Top-40 index

Source: http://news.yahoo.com/africas-massmart-fy-profit-misses-estimates-060552900--sector.html

London 2012 rhythmic gymnastics Meteor Shower August 2012 paul ryan jessie j jessie j Tyrann Mathieu kobe bryant