An increased contribution from less-profitable food sales and higher expenses hit Massmart’s first-half earnings, although the South African retailer grew sales during the six-month period.

The company, in which Wal-Mart Stores holds a majority stake, said today (21 August) operating profit before foreign exchange fell 1% to ZAR730m (US$70.9m). Headline earnings before forex dropped 9.4% to ZAR392m, the group added.

Profitability was hit by a greater contribution from the lower-margin food business and a 7.8% increase in total expenses.

Massmart grew sales by 8.9% in the period, with comparable sales growth of 5.5%. Inflation contributed 7.6% to the total and food inflation stood at 4.4%, the retailer revealed.