SOUTH Africa's largest wholesaler, general merchandise retailer Massmart, has under-performed competing listed retailers in its interim reporting period.

Top-line growth was knocked by low product inflation, marginal volume increases and lower contribution from Africa.

Chief executive officer Grant Pattison said the past 12 months had been difficult since listing in 2000.

Massmart is a good proxy for consumer behaviour because of its diverse range of products and consumers. The group sells a large portion of durable cyclical product items through businesses such as Game and Makro.

Consumers have been buying fewer durable goods and more non-durables, such as food, through the tough times. Management, however, kept costs low and total expenses increased 8,9percent due to acquisitions, while comparable expense growth rose 2,5percent.

Sales grew 6,1percent to R24,154billion for the six months ended December with negative comparable sales growth of 0,5percent and low internal sales inflation of 1,6percent. Gross profit of 17,8percent was slightly lower than that of the previous year at 18,1percent. Headline earnings a share dropped by 19,9percent.

The results were affected by a R68,7million foreign exchange loss due to unfavourable swings in currencies compared with gains last year.

BoE retail analyst Shanay Narsi said the performances of the group were quite poor. "The business is very operationally geared and they need real volume growth for margins to widen."

All divisions have reported a pick-up since the interim reporting period. In the last eight weeks comparable sales grew 3,4percent. Food is still under pressure with low inflation and little or no volume growth, but this is expected to improve.