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Johannesburg - A massive sell-off in the shares of Steinhoff [JSE:SHF], the dual-listed retailer with worldwide interests, was the big news on the JSE on Thursday.
By mid-morning more than 23 million shares of the retail group had been dumped for more than R1.4bn and the share price was already 8.81% lower at R60.25. Earlier in the day it was more than 11% lower at R58.85.
This however did not stop the JSE'’s record-breaking run and by mid-morning the All-share index as well as the Top 40 index were again trading at new all-time highs.
Retail shares were in the spotlight again on Thursday morning when Woolworths [JSE:WHL], one of the icons in the South African retail industry, rocked the market by posting its first annual profit fall since 2009 and warned of continuing tough trading conditions at home and in Australia.
Woolworths shares dropped sharply and by mid-morning were 4.30% lower at R63.19. The General Retailers index on the JSE was at that stage more than 1% lower.
Woolworths said that recession and political turmoil hit consumer spending in South Africa, and the group has faced increased competition in Australia from the likes of H&M and Amazon.
This seems to have rattled investor confidence in the local retail sector. Steinhoff announced on Wednesday that it intends to list its African retail interests separately before the end of September under the name STAR.
The rest of the market was however stronger and by mid-morning the All-share index was 0.46% higher on a new record of 56 420 points, while the Top 40 index traded 0.50% stronger on a record of 49 998 points.
Steinhoff’s woes put a lid on the Industrial index which was only 0.17% firmer, but the Financial index was already 0.76% up. The Resources index resumed its run of late on the back of higher metal prices and a slightly softer rand, which traded at R13.22 to the dollar. The Resources index was 0.95% stronger.
The retail sector attracted a geat deal of attention after Woolworths said that headline earnings per share fell by 7.6% to 421 cents in the year to June 25. That was worse than analyst forecasts.
CEO Ian Mohr said conditions will continue to be tough. “We are under no illusions about that. We are in a storm of change, the customer is changing, technology is changing… our markets are very tough places indeed,” he said in a presentation in Cape Town, adding that medium-term targets have been reduced.
Massmart Holdings [JSE:MSM], the South African arm of Wal-Mart, reported a small rise in half-year earnings on Thursday, helped by cost cuts as cash-strapped shoppers spent warily.
Diluted headline earnings per share came in at 149.3c in the six months to end-June, compared with 145.8c a year earlier, said Massmart, which sells everything from food to televisions and refrigerators. Sales growth was 0.5% higher. The share price gained 2.29% to R127.70.
Shoprite [JSE:SHP], which bucked the trend with strong results on Wednesday, traded 1.72% higher to reach a new intraday 52-week high of R219.63.
Naspers [JSE:NPN], the biggest share on the JSE, was again trying to reach breach the R3 000 level and was 16% higher at R2 997.75 at midday. The share reached R3 001 on Wednesday but then fell back to close at R2 993.00.
There was limited support from the share price of Tencent, Naspers’s Chinese subsidiary, which traded 1.05% higher at HK$327.40 at the Hong Kong Stock Exchange.
Telkom’s [JSE:TKG] share price did not move much on the news that the government is considering selling its stake in the landline provider to fund a R10bn bailout of South African Airways. That was confirmed by a Treasury spokesperson on Wednesday, who said various options are being considered and nothing has been finalised.
