The share price of Spar, one of South Africa’s biggest retailers, fell sharply in early trade on Wednesday after the group posted a 2.9% fall in profit for the year to September.
The company’s stock tanked 10%, wiping billions of rands in value. In its financial results, Spar said its headline earnings per share, a key metric in measuring profit, decreased by 2.9% to 1 159.1 cents per share.
The group said its profitability in the reporting period was impacted by “the consequences of the pandemic in the first half of this financial year and new geopolitical circumstances which have seen all regions experiencing fuel and energy cost pressures”.
“In South Africa, these pressures were further exacerbated by the impact of ongoing electricity loadshedding,” said the company.
Spar’s shareholders will also receive less money after the group more than halved its full-year dividend. Group turnover increased 6% to R135.6-billion, buoyed by the performance of its southern African operations, which contributed 65% of turnover for the group.
Tops at Spar registered sales growth of 42.6%.
The company said the leadership changes it introduced during the year have brought renewed energy.
“The structure includes a new chief executive officer [CEO] for the South African business, reporting to the CEO of the group. The leadership changes have brought renewed energy and focus to the southern African business and a medium-term plan to drive growth is under way,” the company said.
“In South Africa, against the backdrop of a constrained consumer, low economic growth and subdued business confidence, the trading environment is expected to remain unchanged in the short to medium term.
“However, our national and regional marketing teams have innovative promotional programmes geared towards helping Spar support price-conscious consumers and the needs of their communities.”
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