Johannesburg — MASSMART, the owner of Game, Builders Warehouse and Makro retail chains, warned yesterday that profit for the six months to December would come in below last year's level.

For the first 21 weeks of the company's financial year, like-for- like sales, measuring stores in business for a year or more, dropped 0,7%. Total sales grew 4,9%. Sales fell most sharply -- down 3,7%, like for like -- at the company's Massdiscounters unit, which includes general retailer Game and technology chain Dion Wired. At the 71 building-related stores, sales fell 1,2% on a same- store basis.

While the situation is depressed, uncertainty about the local and global economic environment made it difficult to plan ahead, CEO Grant Pattison said.

"It is difficult to forecast Massmart's earnings with any reasonable degree of certainty, but we expect earnings per share and headline earnings per share for the six months to December, including and excluding any foreign currency translation effects, to be below the comparable prior period," he said.

The country's largest food and goods retailer is feeling the pressure more than others in the industry. Since the start of November last year, its shares have dropped 2%, while its rivals on the JSE's general retailers index have all risen. Over the same period Cashbuild is up 31%, Lewis Group up 41% and JD Group up 60%.

Profit from Massmart's sales in the 13 other African countries in which the group operates, and which account for 9% of earnings, was down in both local currencies and rand.

Though the company is benefiting from lower inflation levels this year compared with the corresponding period a year earlier -- down to 3,4% from 11,5% -- it continues to face rising costs. "Internal cost pressures remain driven by wage increases and rampant inflation in local taxes and energy costs," Massmart said.

The South African economy's return to growth in the third quarter, after declines in the first half of the year, suggests relief on the horizon. It will take time, however, before the official figures reported by Statistics SA this week translate into more jobs and people with money to spend.

Massmart said it was cautious about conditions to come.