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Wal-Mart's Massmart sees slower growth as credit debt climbs

By Bloomberg News

This article was published February 28, 2013 at 8:00 a.m.

— Massmart Holdings Ltd., the African food and general goods retailer controlled by Wal-Mart Stores Inc., has seen a “large” increase in the use of credit cards that may weigh on sales, Chief Executive Officer Grant Pattison said.

“The carry cost of debt is eating into disposable income,” Pattison said in a phone interview from Johannesburg on Thursday. “We expect to see customers paying back debt, rather than extending further debt” in 2013.

Massmart is among several South African retailers to warn that rising credit payments toward the end of last year may lead to a prolonged slump in consumer spending.

Truworths International Ltd., South Africa’s biggest clothing retailer by market value, warned of “escalating levels of debt” earlier this month, while Shoprite Holdings Ltd. said fuel price increases and labor unrest will hold back spending in the first half of 2013.

Massmart profit fell 23 percent to $78.2 million in the six months through Dec. 23 because of weaker consumer confidence and the costs of selling control to Wal-Mart, the Johannesburg-based company said in a statement.

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