Spar warns results will be worse as 1,700-store turnaround stalls
The retailer has told the market that operational improvements are not yet showing up in profit, after headline earnings fell 55% earlier this year.
Spar has warned that its financial results for the current year, due in December, will be worse than the previous financial year, according to reporting by eNCA (YouTube). The previous year was not a good one either.
In March the group reported headline earnings down 55%, with profits also lower. The company has been trying to turn itself around, but says its operational improvements have not yet translated into profit.
The scale of the problem is in the store count. eNCA put the number of Spar stores in South Africa at about 1,700, noting the figure could be slightly higher once different brands are counted.
The warning lands in a grocery market where the top end of the customer base is being contested hard. eNCA’s business discussion framed Shoprite as the leader in that race and Spar as the laggard, with the bad news continuing to accumulate.
Analysts quoted in the broadcast are asking the obvious question. If operational improvements are not converting into profit now, when will they, and what does the answer mean for the retailer and for the shoppers who use its stores.
The broadcast raised the possibility that things may have to get worse before they get better, without putting a date on when that turn is expected.
Source: eNCA (YouTube), 1,700 Spar stores and a turnaround that is not working yet (https://www.youtube.com/watch?v=XYr-oquUSr0)
