Cape Town - Retailer Massmart [JSE:MSM] on Thursday outperformed its peers on the JSE after reporting total sales of R38.9bn for the 26 weeks to end-June 2015, an increase of 9.1% over the prior comparable period.
By 10:08 the share price was up 3.46% at R119.77, compared with a 1.5% drop in Woolworths [JSE:WHL] and modest gains for Mr Price [JSE:MPC] (+0.24%), Truworths [JSE:TRU] (+0.52%) and The Foschini Group [JSE:TFG] (+0.52%).
Massmart, the second largest distributor of consumer goods in Africa, said group operating profit, excluding foreign exchange movements and interest, grew by 12.7% - lower than its own expectations "but satisfactory given the soft economic environment".
Operating profit before interest was down 1.4% at R685.2m.
Comparable stores’ sales growth was 6.9% and product inflation 3.7%, suggesting good volume growth.
The group said in a statement that higher net interest paid from funding significant property acquisitions in 2013/14, and an adverse movement in foreign exchange translations, resulted in headline earnings decreasing by 26.0%. Excluding foreign exchange movements, headline earnings declined by 3.9%.
Massmart opened or acquired a net six stores during the reporting period, including two new stores in Africa. This resulted in a net space increase of 0.8% and a total of 398 stores, 35 of these in Africa, at June 2015.
Massmart said the South African consumer economy remains constrained and cautioned on further negative pressure, including food inflation, interest rates and the rand exchange rate.
"The South African manufacturing sector is in technical recession, and measured consumer confidence is at a 14-year low, both partly caused by ongoing electricity outages," it said of its trading environment.
Massmart also said cost inflation from most sources of product or services is high and compounded by infrastructural inefficiency.
The retailer kept its dividend unchanged at 146.0c a share.