DURBAN – Shoprite's shares yesterday tumbled to their worst in nearly 20 years on the JSE, dragging food retail stocks and the All Share Index down after Africa’s biggest grocer flagged that its profits during the six months to end December could fall by as much as 26 percent.
The news, which came after the JSE stopped trading late on Tuesday, sent the market into a tailspin yesterday.
Ron Klipin, a senior analyst at Cratos Capital, said the weak trading update took the market by surprise and the statement became a perfect storm encompassing factors such as food deflation affecting 10 719 items in basic foods.
Shoprite fell 15 percent, the worst since July 1999 as the group blamed low food inflation and a drop in currency earnings for the subdued outlook. It also said lower gross margins, stock shortages and weak trading conditions hammered its performance, driving its stock to R151.53 a share in morning trade. It closed 14.21 percent lower at R153.13.
The rout extended to Pick n Pay, which fell 3.07 percent to R68.50, Woolworths, which slid 3.35 percent to R49.27 and the Spar Group, which eased 2.82 percent to R195.11. The all share ended down 0.47percent, while the retailers general index shed 2.63 percent.