Shoprite shares slump after bleak outlook
Shoprite was also hit this year by a five-month stoppage in the platinum sector.
JOHANNESBURG - South Africa's Shoprite warned of a continuing squeeze on the country's consumers after posting its slowest profit growth in 15 years, sending its shares to a five-month low.
Once among the must-haves in fund manager portfolios thanks to the impact of credit-fuelled spending over the past few years, local retailers are now among the worst-performing stocks as banks pull back on unsecured lending.
Some investors fear spending could diminish further because household debt has grown to about 75 percent of disposable income, just as the economy hits a rough patch.
"There's not much relief in sight for the beleaguered South African consumers," said Whitey Basson, Shoprite's managing director. "What was experienced on the sales floor was a reflection of the country's broader economy."
South Africa's economy shrank in the first quarter, hit by a drop in consumer spending that had boosted expansion of closer to 5 percent before the country slipped into recession in 2009.
Shoprite, which focuses on staple products for low-income and working-class consumers, was also hit this year by a five-month stoppage in the platinum sector, the longest strike in the country's history.
The company said the strike cost it about R1 billion in lost sales, about 1 percent of its total.
Shoprite, Africa's biggest retailer, reported a 3.3 percent rise in full-year headline earnings per share to R6.97, well below a R7.29 estimate in a Reuters poll of 16 analysts.