Half-year profit at South African retailer Woolworths Holdings could fall by as much as 17.5 percent, it said on Monday, sending its shares down more than 9 percent.
A combination of a recession and political turmoil have eroded consumer spending power in South Africa and Woolworths is facing tougher competition in Australia from the likes of H&M, and new entrant Amazon.
Woolworths, which sells groceries, food and homeware, said headline earnings per share – the main gauge of profit in South Africa – was likely to fall between 12.5 percent and 17.5 percent or 200.1 cents and 212.3 cents in the six months to December 2017.
Shares in Woolworths, similar in products and style to Britain’s Marks and Spencer, fell as much as 9.2 percent after the announcement before paring losses. At 0852 GMT it was down 5.5 percent at 59.85 rand ($4.85).
The retailer said group sales for the first half of the 2018 financial year increased by 2.5 percent, slower than a 6.7 percent rise in the first half of the 2017 financial year.
Woolworths said in August, it plans to spend 2.1 billion rand in South Africa in 2018 and $250 million in Australia in its David Jones and Country Road clothing brands.
($1 = 12.3329 rand)