28 May Tough times for Massmart & Tiger Brands

Not a great week on the JSE – two major drivers, firstly the continued sell-off in emerging markets, and secondly, lots of consumer dependent company results... a few bright spots, but predominantly bad news.

The SARB left the benchmark interest rate unchanged. S&P leaves SA credit rating unchanged – yay, looks like we’re out of the woods. Massmart was down as much as 18.5% on Thursday after they released a trading statement warning that at their interim results, earnings could be down as much as 70% - when last did you shop at DionWired, Makro or Builders Warehouse?

Famous Brands also reported. In this case, the South African operations actually not doing too badly, but the UK Gourmet Burger Kitchen is an absolute disaster and unfortunately, too big in the context of the group for SA to compensate. The Tiger Brands results presentation was a tough one - in fact, one of the analysts even asked the CEO, Lawrence McDougal, why he hasn’t resigned (referring to the death of 200 people caused by their Enterprise product range).

Melissa’s food shop has filed for liquidation. STAR attempting to distance themselves from Steinhoff, as they repay R16bn; and Steinhoff, in turn uses that money to repay some of their outstanding debt. Capital and Counties, a company we once held shares in, announced a splitting into two businesses: 1. Covent Garden, and 2. Earls Court development. H&M is looking at South Africa as a potential supplier, with executives from the world's second largest clothing retailer visiting some of the country's main cities last week.
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