South Africa's Massmart sees tough second half after profit slide

Headline EPS, South Africa's primary profit gauge, excludes certain one-off items.

Massmart, which generates nearly 10 per cent of its sales in several African countries outside South Africa, said favourable currency swings added 134 million rand ($13.09 million)to the bottom line, causing headline EPS to increase by 52 per cent.

Sales increased 8.9 per cent to 32.4 billion rand and the company maintained its dividend payout at 146 cents per share.

After more than two years as an investor favourite, South African retailers are fast falling out favour due to concern that high personal debt levels and reluctance among banks to lend more will squeeze spending in Africa's biggest economy.

"There's little on the macro-economic horizon that suggests any improvement," said Massmart, which is 51 per cent-owned by Wal-Mart. "We believe the remainder of the year will continue to see sales under pressure."

South African retail sales grew by a smaller-than-expected 1.9 per cent in June, data from the government statistics office showed last week.

Shares in Massmart are down about 20 per cent so far this year, lagging behind a 10 per cent gain in Johannesburg's All-share index.