South African grocery retailer Massmart Holdings saw its share price fall today (24 February) as it forecast a “difficult” second half to its fiscal year.

Shares in the retailer were down 2.9% at 16:07 SAST to 14,065 cents a share, despite the company recording headline earnings growth for the first half of its financial year.

Massmart, in which Wal-Mart Stores is in the process of acquiring a 51% stake, said that for the half year ended 26 December, headline earnings rose 6.5% to ZAR739.5m (US$104.7m). Over the period revenue rose 13.4% to reach ZAR27.45bn.

It said that “softer sales growth over Christmas, and in the eight weeks since then, suggest that the South African economy may not be in a sustainable recovery”.

“Should the trends experienced in the Christmas period and the subsequent eight weeks continue, we expect a difficult second-half,” the retailer said. It added that management will focus on reducing stock levels, holding gross margins and containing costs to continue to grow annual operating profits, “albeit perhaps at lower levels than achieved in the first half of this financial year”.