Johannesburg - Woolworths shares fell the most in more than three months after the South African food and clothing retailer said annual sales growth slowed and charges related to bad debts increased.
Sales increased 12.7 percent in the 52 weeks through June 29, the Cape Town-based retailer said in a statement today.
That was below forecasts for a 13.5 percent boost, according to the mean estimate of 13 analysts surveyed by Bloomberg.
Woolworths sales increased 23.2 percent in the previous fiscal year, which lasted 53 weeks.
South Africa’s consumers have been struggling in Africa’s second-biggest economy due to high unemployment and inflation that has increased to 6.6 percent.
The reserve bank may raise interest rates later today, adding further pressure to mortgage-holders and savers.
Woolworths clothing sales grew 8.4 percent in South Africa, compared with 13.7 percent in 2013.
The revenue figures “are a bit disappointing and we see the clothing sales are subdued,” Roger Tejwani, a retail analyst at NOAH Capital Markets, who has a hold recommendation on Woolworths, said by phone from Cape Town.
“Clothing sales in South Africa are becoming increasingly competitive as more international brands come in.”
The shares declined as much as 3.1 percent, the most on an intraday basis since April 9, and traded 2.5 percent lower at 81.30 rand as of 12:05 p.m. in Johannesburg.
The stock has gained 8.9 percent this year, below a 9.1 percent increase on the FTSE/JSE Africa General Retailers Index.
Woolworths said its impairment rate related to debt defaults climbed to 4.8 percent from 3 percent a year earlier as customers struggled to repay borrowings through the retailer’s financial services arm.
The company is putting the final touches to a $2 billion acquisition of David Jones in Australia in an effort to create a southern-hemisphere retail giant. - Bloomberg News