JOHANNESBURG (Reuters) - South African retailer Massmart on Thursday warned of lower headline earnings per share for the first half of the year and said that Walmart executive Mitchell Slape would become its new CEO.
Massmart, in which Walmart has a majority stake, said headline earnings per share for the six-months ended June might be at least 50% lower than the prior year, while operating profit before interest, depreciation, restructuring, non-trading items and taxation might be flat.
The trading statement sent Massmart’s shares down more than 12% to a 10-year low. At 0949 GMT shares were down 10.05%.
The new CEO Slape will take over from Guy Hayward who resigned in May, the South African retailer said.
Massmart, with presence in 13 countries in sub-Saharan Africa, had said earlier in May that the timing of Hayward’s exit was still to be confirmed but that he would remain in the company until later in the year for the handover.
Slape has been with Walmart since 1995 and has held several senior leadership positions across a range of retail formats and Walmart markets, including the United States, Japan, India and Mexico.
Slape will join Massmart as it plans to add 47 new stores between 2019 and 2021, with about a third of the new space outside its home market, where it has been expanding slowly.
Retailers have found it tough to boost earnings in South Africa, where an increase in value-added tax, unemployment, coupled with higher fuel prices and utility costs have reduced consumers’ spending power.
On its trading update Massmart said: “Current economic data and sentiment cause us to believe however, that most risks associated with the above estimates are likely to the downside.”
In the first 20 weeks of the 2019 financial year, Massmart’s sales rose 6.1% to 33.5 billion rand, with comparable sales growth of 4.1%.
Slape will start from the first day of the month following the date of approval and grant of his intra-company transfer permit and visa to work in South Africa, Massmart said.
Reporting by Nqobile Dludla; editing by Jason Neely and Jane Merriman