Shoprite’s FY profit growth lags consensus

South African grocer Shoprite Holdings missed estimates with a 3.3 percent rise in full-year profit on Tuesday as consumers battling high personal debt and rising prices cut spending.

Africa’s biggest retailer said diluted headline earnings per share totalled 697.6 cents in the year ended June, well below 729 cents estimate in Reuters poll of 16 analysts.

Headline EPS, the most widely watched profit gauge in South Africa, strips out certain one-off items.

“With economic growth expected to remain below 3 percent in the new financial year, there is not much relief in sight for the beleaguered South African consumer,” CEO Whitey Basson said in a statement. “The improved sales growth in the last quarter of the 2014 financial year has continued into July and beyond, but with market conditions unchanged, it is doubtful whether this can be sustained.”

Shares in the company tumbled more than 4.2 percent to 147.79 rand by 0912 GMT, lagging a slightly higher JSE Top-40 index

Retailers in Africa’s second largest economy are among the worst performing stocks in the past 12 months, reflecting investors’ fears about the impact on consumer spending of tepid economic growth, rising fuel prices and high household debt. Sales increased 10.5 percent to R102.2 billion.

The South African Reserve Bank raised its benchmark interest rates for the second time this year on July 17, cutting disposable income for borrowers.

“We invested heavily in the future of the group in anticipation of the next upswing in the economy,” Basson said. “This was achieved in an environment of constantly rising costs, especially in the areas of electricity and energy over which we have no control.”

Revenue from outside South Africa, which accounts for almost a fifth of Shoprite sales, increased by 27 percent, in line with the previous year. The company added 16 African stores outside its home market, bringing the total to 169 across countries including Nigeria Angola, and Zambia.