Spar's mixed bag of Covid-19 affected results sees the company's share price fall by over than 6%
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THE SPAR GROUP’S share price fell sharply by more than 6 percent yesterday afternoon after it declared a 5.7 percent lower dividend of 816 cents for the year to September 30, following Covid-19 trading restrictions in all its markets.
Diluted headline earnings a share were up 5.5 percent to 1 193.7c. Net asset value per share increased 6.1 percent to 4 350.5c. The share price traded at R183.88 yesterday morning. The group said it had delivered a robust performance, despite numerous challenges. Turnover increased by 2.9 percent to R127.9 billion.
In constant currency, turnover increased 3.9 percent, reflecting a strengthening rand.
The group was also affected by the July civil unrest in South Africa – the wholesale turnover loss from this was estimated at R638.4 million across the grocery, liquor and Build it businesses.
The Irish and Swiss operations saw strong performances. Poland failed to deliver an expected financial improvement. The mixed performance across regions delivered group operating profit of R3.4bn, down 1.5 percent on the prior period.
The increase in diluted headline earnings per share was influenced positively by the settlement of minority interests in the Irish and Swiss businesses, thereby reducing accounting adjustments for these financial liabilities. Spar Southern Africa contributed growth in wholesale turnover of 3.4 percent to R81.3bn.
“Our core wholesale food business sales declined 0.4 percent. The business has seen changing consumer behaviour over 18 months due to the pandemic, the extended lockdowns and restricted liquor trading, all of which have weighed heavily on certain stores,” the group said.
The civil unrest and closure of damaged and looted stores also negatively affected the business in the fourth quarter. The liquor business again lost a third of its total trading days due to the retail bans on liquor sales.
The Tops at Spar liquor business grew wholesale turnover by 11.2 percent, but was still down 6.4 percent against the year ended September 30, 2019.
Build it wholesale turnover increased 23.5 percent, driven by rural home development and urban home improvement spend. The total Southern African store network grew to 2 440 stores, with 26 new stores opened across all brands – 53 stores remained closed at year end that were damaged by the unrest.
Some 373 store upgrades (219 Spar stores) were completed, against 310 upgrades (167 Spar stores) in the same period in 2020, and 298 upgrades (181 Spar stores) in 2019, highlighting the aggressive upgrade programme, as well as retailer appetite to reinvest in their stores.
In South Africa, the consumer environment was expected to remain tough, but there was a strong pipeline of new store development, a robust upgrade programme was in place, and an e-commerce platform was being developed for its retailers.
BUSINESS REPORT ONLINE