DURBAN – Massmart fell more than 20 percent on the JSE yesterday as South Africa’s top retailers buckled under subdued consumer spending and currency fluctuations in the continent.

The tumble extended to Shoprite which was sliding more than 3 percent in early trade before closing 0.37 percent lower at R185.32 as Africa’s largest retailer also flagged consumer pressures in the domestic market and sharp currency devaluations in its major Africa operations, downing turnover 13.27 percent in the six months to end December. 

Massmart said its total sales increased 2.9 percent to R90.9 billion for the 52 weeks to end December, while comparable store sales increased 1.2 percent and with product deflation estimated at 0.2 percent.

The group said despite a satisfactory sales performance over the Black Friday period, sales growth slowed in all divisions, apart from Massdiscounters, in both November and December 2018. 

“The slowdown resulted in total and comparable sales growths in that two-month period being 0.1 percent and -0.9 percent respectively,” Massmart said.

However, the group said its sales since the beginning of the year have shown some improvement. 

“Total and comparable sales growths for the first three weeks of 2019 are 4.6 percent and 3.1 percent respectively,” it said.

Massmart closed 20.96 percent lower at R90.65.

Shoprite said higher fuel prices and increased value-added tax stifled its home market and sharp devaluations in the currencies of its major Africa operations downed its turnover 13.27 percent in the six months to end December. 

The group has lost 2.2 percent since January.

Shoprite said non-RSA supermarkets recorded the biggest decline in rand terms, mainly as a result of resetting sales performance in Angola.

The Angolan unit fell 44.95 percent in rand terms after a significant 85.13 percent devaluation of the kwanza to the US dollar since January 2018.

“The Angolan economy remains in recession, with weaker consumer spending evidenced in the second quarter,” the group said.

Sales in Angola in the second quarter showed a 49.55 percent decline, while the first quarter sales declined by 39.35 percent. 

“Excluding Angola, Supermarkets Non-RSA managed to achieve a positive sales growth of 4.41 percent in constant currency,” the group added.

Shoprite recorded a pedestrian 0.03 percent increase in turnover to R72.9 billion for the six months to end December. 

However, the group’s core business, Supermarkets RSA, achieved 2.58 percent sales growth for the period. 

“The core Shoprite middle-income consumer base remains under pressure. This was evidenced in Christmas sales in categories like Back to School essentials, which outperformed traditional discretionary purchases such as toys for the first time,” the group said.

Jordan Weir, a trader at Citadel, said the operational update was not in line with expectations. 

“Not all as analysts generally expected around 5.16 percent growth in revenue, while Shoprite’s operational update demonstrated an anaemic 0.03 percent growth in revenue instead, representing quite a large miss,” Weir said. 

He said the underwhelming revenue numbers were primarily attributed to Shoprite’s non-South African supermarkets, where currency fluctuations played a negative role. Despite the subdued consumer spending, the group managed to increase the number of customer visits by 1.7 percent. 

Shoprite and Massmart are expected to release their results next month.