Wal-Mart’s Massmart venture expects slower growth

South Africa's Massmart Holdings said on Wednesday (May 22) it expects lackluster sales growth this year, as the unit of Wal-Mart Stores Inc. battles with weak consumer demand in Africa's top economy.

Wal-Mart, majority owner of Massmart since the purchase was completed last year, expects comparable store sales rose 5.6% for the first 21 weeks of this fiscal year. (Massmart reports earnings semi -annually – in July and January.

Also for the first 21 weeks of this year, Massmart’s total sales growth was 9.8% with an inflation rate of 3.1%.

“The decline in comparable sales growth has been evident in all product categories and across all South African geographies,” CEO Grant Pattison said during its annual shareholder’s meeting Wednesday in Johannesburg.

Massmart expects sales growth to remain tepid for the balance of this year. The retailer said it plans to focus aggressively on cost control.

The retailer continues to invest in expansion which has raised operating costs this fiscal year. The company said it expects to open 27 new stores in the remainder of the financial year, including Builders Warehouse stores in Botswana and Mozambique.

Shares of Massmart were down 0.8% at 202.50 rand in morning trading.

“With the Wal-Mart transaction now behind us, which included the competition authority’s approval, integration and changing external auditors, we have begun a period where our focus is concentrated on strategic implementation and operational execution,” Pattison said to shareholder’s on Wednesday.

Massmart’s next sales update will be in early July.