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Bloomberg
Massmart Holdings Ltd.’s lower dividend payout is yet another international headache for majority owner Walmart Inc.
The South African retailer, controlled by the Bentonville, Arkansas-based global chain, cut its full-year dividend 40 percent, sending the shares as much as 6.7 percent lower.
Walmart, which bought a majority stake in Johannesburg-based Massmart in June 2011 for 16.5 billion rand ($1.2 billion) has reported growing hurdles overseas, including in China, India and the UK. In South Africa, Massmart is contending with falling sales at some retail outlets amid a slowdown in the continent’s most-industrialized economy and stubbornly high unemployment.
Massmart is giving shareholders a choice of taking their dividend payout as cash or shares — the first time in about 10 years Massmart has used this option. That’s part of retailer’s effort to preserve cash after profitability in the year through December took a knock.
A company broker has indicated that as much as 60 percent of shareholders may opt for the dividend as shares, Chief Executive Officer Guy Hayward said by phone from Johannesburg. If half of the owners take the scrip, it will mean Massmart can shore up 200 million rand of cash, he added.