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Johannesburg - South Africa's third-biggest retailer
Massmart Holdings [JSE:MSM] suffered a 25% drop in full-year profit, hit by
costs related to its $2.4bn deal with Walmart and price markdowns as it fights
to gain a bigger slice in the domestic retail market.
Massmart, majority-owned by the world's biggest retailer,
said on Thursday diluted headline earnings per share totalled 407.5 cents in
the year to end-June compared with 542.7c a year earlier.
Walmart completed the deal that gave it 51% stake in the
wholesale retailer in June this year. Massmart said the costs related to that
transaction totalled R2bn.
The costs included a R100m fund to help develop local
suppliers the two companies agreed to set up in order to secure regulatory
approval for the transaction.
But unions and three government departments, led by the
Economic Development Department, have said the fund is not big enough. The
government departments have separately launched appeals seeking to attach weightier
conditions on the deal.
Massmart said it was confident about its legal position.
"Our legal teams are preparing responses to the
interveners' submissions and are confident about our strong legal
position," the company said as it reported its full-year results.
Massmart said sales increased 11.6% to R53bn, helped by new
stores. Comparable store sales rose 5.2% with product deflation of 1.3%.
